Polymers: PE and PP decline but rebound expected on restocking

18 June 2012 00:00  [Source: ICB]

Import prices for polyethylene (PE) and polypropylene (PP) in China may fall more, following crude oil and feedstock olefins values.

Sharp falls in naphtha and crude prices since June 1 dampened sentiment in the PE and PP markets, with several importers expecting prices to fall in July, or at best hover around June levels.

Asia PPThis price weakness in China polymers markets may prevail until August or September, when restocking activities begin, according to industry sources.

China's average PP import prices could breach the $1,300/tonne (€1,040/tonne) CFR (cost and freight) China main port level if US crude futures fall below $80/bbl, said a Taiwan-based resin producer.

There are concerns that China's average PE import prices could fall to below $1,200/tonne CFR China main port if the country's import demand fails to improve, according to a South Korea-based resin producer.

Most plastics traders and processors in China are said to be holding low inventories and will need to replenish stocks. As a result, importers might return to the market in August and September to procure cargoes.

Most importers refrained from building inventories because of uncertainty in global demand amid the ongoing eurozone debt crisis.

Author: Feliza Mirasol and Chow Bee Lin

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