China PP pipe resins outlook poor on ample supply, low-priced imports

19 September 2011 07:24  [Source: ICIS news]

SINGAPORE (ICIS)--China’s PP pipe resins market is bearish as a result of ample local supply and lower-priced cargoes from overseas producers, a trader in east China said on Monday.

Daqing Refining & Chemicals switched to producing block copolymer polypropylene (PP) grade resins at its 300,000 tonne/year PP unit in Heilongjiang province on 13 September as part of their schedule, a company source said.

Block copolymer PP resins are used in the manufacture of cold water pipes.

The producer is planning to start producing block copolymer PP resins until October and will supply around 20,000 tonnes to the domestic market, a company source said.

The company, which is China’s largest maker of PP pipe resins, produced more than 30,000 tonnes of block copolymer PP in the first half of this year, which accounted for around 30% of the country’s total output during the same period, according to estimates made by industry players.

The increasing domestic supply may dampen to selling sentiment, a second trader in east China said.

The offers of imported random copolymer PP resins used in warm water pipe applications were heard at around $1,760/tonne (€1,285/tonne) CFR (cost & freight) China for shipment in September in the domestic Chinese market, which is a decrease of $50/tonne compared with the settlement prices in August.

The offers of shipments in September will yield a retail price of around yuan (CNY) 14,000/tonne ($2,194/tonne) ex-warehouse, the second trader in east China said.

The prices of random copolymer PP resins in east China are at around CNY14,500/tonne ex-warehouse on 19 September.

As a result, the lower-priced cargoes from South Korean producers may cause the domestic prices to drop upon their arrival in China towards the end of the month, the trader added.

South Korea exported around 120,000 tonnes of PP pipe resins to China in 2010, which accounted for around 60% of China’s total imports, according to estimates made by industry players.

($1 = €0.73, $1 = CNY6.38)

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By: Moon Chen
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