27 September 2013 10:18 [Source: ICB]
China is expected to be saddled with high inventory of polyethylene (PE) and polypropylene (PP) that will likely exert downward pressure on prices when market players return from the holidays in the second week of October, industry sources said on 19 September.
The Chinese markets are closed for the Mid-Autumn Festival on 19-21 September, and for the week-long celebration of its National Day on 1-7 October.
Chinese polymer prices have a tendency to decline immediately after these public holidays as stocks will build up, with production usually continuing despite the closed markets, industry sources said.
Producers may be forced to quote lower offers, they said.
PE and PP prices have risen over the past two months, with PP flat yarn at yuan (CNY) 11,700/tonne ($1,912/tonne) and linear low density polyethylene (LLDPE) at CNY11,450-11,700/tonne in mid-September
These are increases of CNY 1,000/tonne and by CNY700/tonne from early July, respectively, according to Chemease, an ICIS service in China.
Domestic PP supply recently increased in China, as Daqing Refining & Chemical resumed production at its 300,000 tonne/year plant on 15 September after maintenance.
The company also plans to start up its new 300,000 tonne/year PP on 20 September.
An expected restocking by end-users should help buoy up polyolefins prices in the second half of October, according to some market players, citing that most of these buyers have kept low PE and PP inventory as they deem the current cost high.
There are also expectations that supply will eventually tighten in the Chinese domestic market, market sources said.
Fujian Refining & Petrochemical plans to shut its 500,000 tonne/year PE plant 520,000 tonne/year PP plant in mid-October for regular maintenance lasting about 60 days, a company source said.
Iran’s Jam Petrochemical – one of China’s main PE suppliers – is due to take its high density polyethylene (HDPE)/LLDPE swing unit off line for about three weeks of maintenance from 10 October.
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