China’s powdered PP makers keep low op rates on squeezed margins

26 July 2011 12:03  [Source: ICIS news]

SHANGHAI (ICIS)--China’s powdered polypropylene (PP) plants are operating at low rates because the current prices of feedstock propylene are cutting into their margins, industry sources said on Tuesday.

Most powdered PP plants in China are running at below 100% capacity, and facilities in the key production base of Shandong province are, on average, running at 40-50% of capacity, local resin makers said.

Powdered PP makers typically need a premium of yuan (CNY) 800-1,000/tonne ($124-155/tonne) over propylene to justify their resin production, but such price differentials are currently not available, powdered PP makers said.

In Shandong province, locally produced propylene feedstock was offered at CNY11,800-11,900/tonne ex-factory on Tuesday, local powdered PP makers said.

Weak downstream demand hinders local producers’ attempt to raise prices, resin makers said.

End-users in the key PP woven bag application sector typically buy powdered PP when prilled PP yarn grade is more expensive, but these two types of PP resins are currently trading at similar levels, they said.

Prilled PP yarn grade was trading at CNY12,200-12,400/tonne ex-warehouse in north China on Tuesday, according to Chemease, an ICIS service in China.

($1 = CNY6.45)

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By: Belle Huo

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