China import PP block co-polymer grade prices seen stable

SINGAPORE (ICIS)–China’s import prices for polypropylene (PP) PP block co-polymer grade are expected to be stable as sufficient domestic supply can help cover the seasonal uptick in demand.

On 20 October, the prices stood at $1,165/tonne CFR (cost and freight) China, unchanged since 22 September, according to ICIS data.

“In China, many traders are still looking for price rising as Q4 [fourth quarter] is [a] traditional peak season. But … we still can’t sell block copolymer at high prices,” a seller said.

Trading in domestic PP block co-polymer market has been active before the China’s National Day and the Mid-autumn Festival holiday (1-8 October 2017).

Demand has been strong from end-users in the downstream automobile and home appliance industries, industry sources said.

Block copolymer is widely used in the production of industrial products, such as dashboard, automotive interior decorations, bumpers, as well as the interior and exterior parts of washing machines, among others.

The material is also used in household articles, such as bottle caps, cookware, furniture, toys, toolkits, travel cases, bags and various packaging containers.

Growth in China’s home appliance industry has remained healthy in the first half of 2017, boding well for PP block copolymer demand, an east China-based trader said.

The industry posted a 16.0% year-on-year increase in first-half revenue to Chinese yuan (CNY) 804.6bn, while profit rose 9.6% to CNY50.5bn, according to the China Household Electrical Appliances Association.

China’s automobile industry, on the other hand, posted strong growths in production and sales in September on both a year-on-year and month-on-month bases.

The country’s total vehicle production in September stood at 2.67m units, up 27.6% month on month and up 5.5% year on year; while sales were at 2.71m units, up 23.9% from August and 5.7% higher compared with the same period last year.

According to automotive dealers, the January-September figures of this year have exceeded their overall sales in 2016, and they expect performance in October to remain strong.

Meanwhile, import supply of PP block copolymer in China will continue to be tight as most suppliers from southeast Asia and Middle East have re-allocated their cargoes to the Americas, which is short in supply after Hurricane Harvey caused massive shutdowns of petrochemical capacities in the US Gulf Coast in late August.

China may not receive the usual year-end import volume from US suppliers, which are trying to avoid paying high inventory fees, since the US is short in supply.

“They [import traders] don’t have too much cargoes in hand. Import supply is quite limited. However, domestic cargoes are ample … and cheaper,” a south China-based trader said.

Supply in the domestic market is sufficient, with weekly production since the beginning of August at 88,000-112,000 tonnes, higher than the previous output of 73,000-90,000 tonnes.

Ample domestic supply will likely keep local prices of PP block copolymer from moving up.

Some Chinese buyers deem the import prices too high and have been preferring to buy cheaper domestic cargoes from the spot market.

In the week ended 20 October, weekly prices for domestic copolymer were assessed at CNY9,700/tonne, while equivalent CNY prices for import copolymer were higher at CNY9,750/tonne, according to ICIS data.

Focus article by Dora Xue

($1 = CNY6.64)

Picture: Workers at a car factory in Zhejiang, China. (Source: Imaginechina/REX/Shutterstock)