China PP falls CNY100/t on reduced demand

28 March 2008 08:11  [Source: ICIS news]

SHANGHAI (ICIS news)--Polypropylene (PP) prices in China fell yuan (CNY)100/tonne ($14.2/tonne) this week after seeing a continued rise during the past few weeks, on reduced downstream demand, traders said on Friday.

Prices were pegged at CNY12,200-12,400/tonne on Friday, buyers in east China said.

The proposed start-up of Formosa Polypropylene’s new PP unit could increase supplies and further reduce the prices, they added.

"We are reluctant to build up inventories because we expect to see oversupply in April," one of the traders said.

Formosa Polypropylene expected to start up its Ningbo-based 450,000 tonne/year PP unit in early April, a company official said on Friday, adding that the unit’s commissioning could see a short-term tightening of propylene supply.

The Formosa unit, which would be the largest PP facility in China, was expected to increase east China’s PP capacity by 25%, or add 8% to the country’s total capacity of the product.

Traders feared that China’s PP market could be under a lot of pressure if the Formosa unit ran to full capacity.

This week’s fall in prices occurred after a rally that lasted several weeks and saw PP prices rising CNY500-600/tonne in less than a month on tight supply and high crude values.

($1=CNY7.01)

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Author: Longston Li
+65 6780 4359

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