01 March 2013 09:10 [Source: ICB]
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 20 February.
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 on 20 February, 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.
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 will be replenishing stocks of polyolefins in the next few weeks, as their resins inventory had been drawn down before the holiday, sources said.
A sharp increase in import, however, is being ruled out as most traders and producers in China have high inventories, traders said.
"Many local traders and producers kept their stocks because they believed prices would rise after the holiday," a China-based trader said.
Slow sales for Chinese polymer producersin the past two weeks resulted in a build-up of inventory, an industry source said. Continuing uncertainty in downstream demand, however, may weigh on the Asian polymer market, local traders said.
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