FocusChina PP flat yarn may extend falls after hitting six-month low

07 March 2014 02:33  [Source: ICIS news]

By Chow Bee Lin

China PP flat yarn may extend falls after hitting six-month lowSINGAPORE (ICIS)--China’s import prices for polypropylene (PP) flat yarn resins are hovering at a six-month low, and look set to fall further as domestic producers are saddled with high inventory of the polymer amid weak downstream demand, industry sources said on Friday.

A sharp decline, however, is unlikely as prices are backed by firm production costs, they said.

PP flat yarn import prices have shed 1.2% last month to average $1,477.50/tonne CFR (cost and freight) China in the week ended 28 February, according to ICIS.

Chinese PP producers had built up considerable inventory during the Chinese New Year holiday from end-January to early February, industry sources said.

During the holiday lull period, some of them had offered discounts of yuan (CNY) 50/tonne ($8/tonne) for the first 50 tonnes sold in an effort to reduce inventory.

This month, however, reduced output at some Chinese PP plants and planned maintenance at others should help ease the inventory pressure in China, industry sources said.(Please see table below)

Some Chinese traders, however, doubt the pressure will ease soon, citing that the process could take a full month.

Orders for plastics products are slowly improving, but downstream producers have adequate inventory of imported PP, a source at an east China-based manufacturer said.

A number of downstream plastics processors had stocked up on supply before the Chinese New Year holiday, Chinese traders said.

The Chinese markets were closed from 31 January to 6 February for the Lunar New Year.

For some PP grades such as specialty PP block copolymers and PP random copolymer grades, inventory pressure in China had less impact on their import prices as only a few domestic producers make these types of resins, a source at a South Korean PP producer said.

Source: ICIS Chemease

Plant

Capacity (kt/yr)

Turnaround begins

Duration

Remark

Ningxia Shenghua

500

Mid-March

40 days

Turnaround may be postponed to April

Shanghai Petrochemical

100

100

Early March

15-18 days

n/a

Datang International

250

n/a

n/a

Line 1 ops at 60%; Line 2 idle since 30 January

Shaoxing Sanyuan

200

300

n/a

n/a

Operating at 80%

Guangxi Beihai

200

n/a

n/a

Cut ops to 50% from March

Shanghai SECCO

250

7 March

45 days

n/a

 ($1 = CNY6.12)

Additional reporting by Doreen Zhao

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Chow Bee Lin
+65 6780 4359



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