20 February 2013 06:45 [Source: ICIS news]
By Chow Bee Lin
SINGAPORE (ICIS)--China’s polyethylene (PE) and polypropylene (PP) import prices will be supported by high costs of feedstock, and may even increase up to the first half of March on restocking activity, industry sources said on Wednesday.
End-users in China are low on polyolefins inventory after a week-long Lunar New Year holiday, while supply from the Middle East is tight, they said.
Spot prices for linear low density PE (LLDPE) were unchanged week on week at $1,435-1,460/tonne (€1,076-1,095/tonne) CFR (cost and freight) China, while PP flat yarn or raffia was steady at $1,425-1,465/tonne CFR CMP (China Main Port) on 15 February, according to ICIS.
The Chinese markets were closed on 9-15 February.
PE and PP producers in Asia are unlikely to offer discounts because their margins are being squeezed by the high costs of feedstocks propylene and ethylene, a source at a Middle Eastern polymer producer said.
At noon, ethylene prices were at $1,400-1,420/tonne CFR NE (northeast) Asia, while propylene prices were at $1,410-1,430/tonne CFR NE Asia, according to ICIS.
Naphtha-based polyolefin producers in northeast Asia have incurred negative margins – $130/tonne for PE and $117/tonne for PP – in the week ended 15 February, according to ICIS.
Supply from the Middle East is expected to be relatively tight in March as a number of plants in the region had just resumed production after scheduled turnarounds, an industry source said.
In China, end-users would be replenishing stocks of polyolefins in the next few weeks, since their resins inventory had been drawn down in early February before the Lunar New Year holiday, market sources said.
A sharp increase in import prices of PE and PP, however, is being ruled out as most traders and producers in China are holding high inventory of the polymers, traders said.
“Many local traders and producers kept their stocks because they believe prices would rise after the holiday,” a China-based trader said.
For Chinese polymer producers, sales had been slow in the past two weeks resulting in a build-up of inventory, an industry source said.
Continued uncertainty in downstream demand, however, may weigh on the Asian polymer market, local traders said.
“Many plastics processors were still operating at low rates because many of their workers are still away on holiday, and are expected to return only after 24 February,” a local trader said.
($1 = €0.75)
Additional reporting by Angie Li, Doreen ZhaoRead John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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