15 October 2013 06:17 [Source: ICIS news]
By Amy Yu
SINGAPORE (ICIS)--Spot prices of most polypropylene (PP) grades in China may continue to rise in the coming weeks because of tight supply, as some major facilities are running at reduced rates, market sources said on Tuesday.
In the Chinese domestic market, PP raffia yarn prices on 14 October were assessed at yuan (CNY) 11,650-11,900/tonne ($1,909-1,950/tonne) – its highest since September 2012 – while block copolymer PP stood at CNY11,550-12,000/tonne – the peak since end- November 2012, according to Chemease, an ICIS service in China.
“We remain cautious on the market outlook in late October,” an east China-based trader said.
PP market price is likely to rise continually in October as a result of tight supply, a South Korea’s trading company source said.
Traders were not inclined to sell as they did not have sufficient cargoes, an east China-based distributor said.
Most traders and downstream manufacturers who were keeping low inventories because of uncertain market conditions had now plans to restock, a north China-based trader added.
For the month of September, China’s PP production declined to 938,500 tonnes, down by around 4% from the monthly average since the start of the year, according to Chemease data.
Sichuan Petrochemical’s 450,000tonne/year PP capacity has remained shut after the unit’s trial run in June, with no formal start-up date announced.
Fushun Petrochemical’s 390,000 tonne/year PP plant, which was taken off line on 15 May for regular maintenance remains off line despite initial plans to restart it in June.
A company source said Fushun Petrochemical has passed an environment examination on 14 October, but there is no specific information for restart date.
Meanwhile, Fujian Refining & Petrochemical plans to shut its three PP lines with a combined capacity of 420,000 tonnes/year on 18 October for maintenance, which will last for two months.
The company has a 220,000 tonne/year PP line, an 180,000 tonne/year and a 120,000 tonne line in Fujian province.
In Inner Mongolia, on the other hand, Datang International Power Generation is running its two PP lines with a combined capacity of 500,000 tonnes/year at half capacity because of a mechanical problem, a company source said.
The spike in PP prices, however, is a disheartening development for downstream manufacturers.
Prices of downstream product biaxially oriented PP (BOPP) packing films are not rising as fast as PP.
A Zhejiang-based BOPP producer said that no margins can be generated if the feedstock price is above $1,500/tonne.
Spot prices of PP yarn imports stood at $1,485-1,520/tonne CFR (cost and freight) China on in the week ended on 11 October – the highest level hit since early-October 2011, according to ICIS data.
PP prices rose too quickly from end-September with the average prices of daily domestic PP raffia yarn were at yuan (CNY)11,792/tonne on 14 October, up by 3.1% from the prices on 26 September, according to Chemease,
Additional reporting by Summer Zhang and Doreen Zhao
($1 = CNY6.10)
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