30 September 2011 06:37 [Source: ICIS news]
GUANGZHOU (ICIS)--Trading on China’s petrochemical markets has been inactive this week as buyers retreat to the sidelines ahead of the National Day holiday that runs from 1-7 October, industry sources said on Friday.
Weakening prices on the futures and spot markets have heavily dampened buying interest for some petrochemicals, sources said.
On the polyolefin market, traders are attempting to offload stocks, but weak demand is making it difficult to conclude transactions, traders said.
“We just want to sell out the stocks and wait until after the holiday for replenishment,” a polyolefin trader based in southern China said.
Another polyolefin trader said it had been losing money for months. “But we still have to sell because the longer we hold [stocks], the more we lose,” the trader said.
“Prices are decreasing so fast and steep in the past few days that we dare not buy at this moment,” said one polyvinyl chloride (PVC) trader.
A PVC end-user said it had decided to stop pipeline production for four days during the holiday, as prices of the feedstock are expected to fall futher.
“Usually, we only shut production for one day during such holidays, but now we want to avoid losses,” said a source with the PVC pipeline producer.
A similar situation is taking place in the methanol market, where most participants are adopting a wait-and-see approach.
“We are not buying now because it’s so hard to judge the price trend,” said a trader based in eastern China.
For the base oils markets, ample supply and diving crude oil prices are expected to hamper transactions even after the holidays, sources said.
“Everyone is concerned about the debt crisis and its impact on the economy and crude prices. We think it’s too risky now to take an aggressive move,” said one buyer.
For the rubber market, buyers are taking a cautious stance and are reluctant to purchase material amid the hefty falls in prices.
“We predict prices to go down further during the holiday, so, we are not buying now,” said one trader.
However, the gasoline and diesel markets have not been hit by thin trading ahead of the holidays. Transactions only decrease slightly before the holiday as it is now the peak season for the diesel market, market sources said.
Additional reporting by Victor Liao, Cherry Huang, MK Liu, Amy Yu, Nancy Shi and Ken Yin
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