FocusChina PE, PP import prices to fluctuate in tight range

06 August 2012 05:55  [Source: ICIS news]

By Chow Bee Lin

China PE, PP import prices to fluctuate in tight rangeSINGAPORE (ICIS)--China’s polyethylene (PE) and polypropylene (PP) import prices are likely to stay within a tight range up to end-September as low inventory of the polymers coincided with weak downstream demand, industry sources said on Monday.

In the week ended 3 August, the average weekly prices of linear low density PE (LLDPE) and PP yarn were assessed at $1,260/tonne (1,021/tonne) CFR (cost and freight) and $1,355/tonne CFR China, up by 3.7% and 3% from four weeks ago, respectively, according to ICIS.

Demand usually improves in August/September as downstream plastics processors ramp up production ahead of the peak year-end consumption in the local and overseas markets.

But the improvement this time is likely to be marginal because orders from the US and Europe for Chinese exports have remained weak, said a Middle East resin producer.

“Downstream demand is unlikely to improve markedly within the short term,” said a source at a South Korean trading house.

While China’s home appliance and film packaging application sectors have received more export orders from downstream customers for delivery in August and September, the overall downstream demand is still much weaker compared with the same time last year, said a home appliance and a furniture maker.

Operating rates at China’s home appliance manufacturing plants will only improve to 40% in August-September, from around 20% in July, the home appliance maker said.

Typically, activities in the sector go in full swing in China for the September-January period, with facilities operating at near 100%, the Middle East producer said.

China is a key market for Middle Eastern polymer producers.

In the first half of the year, China produced 26.41m tonnes of plastics finished goods, up 10.8% on a year-on-year basis, much slower than the annual growth of 24.52% registered in the same period in 2011, according to the China National Bureau of Statistics.

However, most Chinese importers said they do not expect PE and PP prices to fall sharply in the end-August to end-September period, as a number of importers have been maintaining low inventories because of low business visibility.

Most Asian producers also have low inventory because high naphtha costs in May-June had led many of them to run their plants at reduced rates, Chinese importers said.

Some Middle East and Asian resin producers might raise their offers to China in end August to close the price gap with other markets, such as southeast Asia, industry sources said.

($1 = €0.81)

Additional reporting by Amy Yu, Angie Li

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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By: Chow Bee Lin
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