China domestic PP yarn prices fall on weak demand, rising supply

23 November 2011 07:56  [Source: ICIS news]

SINGAPORE (ICIS)--China’s domestic prices of polypropylene (PP) yarn have fallen by yuan (CNY) 350-450/tonne ($55-71/tonne) because of weak downstream demand, industry sources said on Wednesday.

The prices fell from CNY11,100-11,700/tonne EXWH (ex-warehouse) on 1 November to CNY10,650-11,350/tonne EXWH on 23 November, according to data from Chemease, an ICIS service in China.

The demand for PP yarn is poor because of growing concerns about the eurozone debt crisis, which have resulted in fewer export orders of finished products, the sources said.

The tightened monetary policies imposed by the Chinese government to curb inflation is also weakening demand, causing downstream producers to struggle with tightened cash flow, according to the sources.

Buying ideas in east and north China were heard at CNY10,500-10,600/tonne EXWH, while selling ideas were heard at above CNY10,700/tonne EXWH on Wednesday.

However, most sellers said the cost of their inventories are at CNY10,700-CNY11,400/tonne, so they are unwilling to cut their prices sharply or accept bids at below CNY10,700/tonne.

Meanwhile, supply is expected to increase as fresh imports from Saudi Arabia are scheduled to arrive at major south China ports in late November, according to local distributors.

The expected rise in supply is weighing down on prices and traders in south China said they will continue to offload their cargoes at the lower prices.

Looking ahead, most market players said they expect prices to soften further in the near term, because of the weak demand and rising supply.

($1 = CNY6.36)

For more on polypropylene, visit ICIS chemical intelligence
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Amy Yu

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