China PP prices rising on tight supply ahead of holidays

SINGAPORE (ICIS)–Spot polypropylene (PP) prices in China have been rising continually on the back of tight supply ahead of upcoming public holidays, a trend likely to continue in the near term.

– Domestic prices keep climbing amid tight domestic supply

– Chinese markets to close for Mid-Autumn Festival and National Day celebration

– Import market inches up on the back of soaring domestic prices

In the week ended 14 September, domestic PP flat yarn prices in east China were assessed at Chinese Yuan (CNY) 9,870-10,080/tonne, up by CNY170/tonne from the previous week, according to ICIS data.

On 20 September though, daily domestic PP flat yarn prices in east China had already climbed to CNY10,400-10,550/tonne, according to ICIS data.

Domestic spot prices have also been climbing for three weeks on the back of continuous planned and unplanned maintenance at PP plants.

Part of the tight supply is reportedly caused by some coal producers in the northern parts of China who are required to stop or cut production in line with the environmental protection efforts.

Zhong Tian He Chuang’s coal-based PP plant with capacity of 350,000 tonnes/year was shut on 14 September because of environmental protection reasons.

PP supply was short across China but the situation was more acute in east and north China.

PP Shutdown List Unit: ‘000 tonnes/year
Company	Capacity	Units	Shutdown	Restart	Reasons
Qinghai Salt Lake	160	PP	1-Apr,2017	unknown	Regular maintenance
Datang Duolun	230	PP	15-Apr	unplanned	Regular maintenance
Datang Duolun	230	PP	15-Apr	unplanned	Regular maintenance
PetroChina Huabei	100	PP	5-Jul	Oct	Regular maintenance
Oriental Energy(Ningbo)	400	PP	12-Sep	unknown	Unexpected maintenance
PetroChina Daqing Refining & Chemical	300	No. 2 PP	15-Aug	30-Sep	Regular maintenance
Shenhua Ningxia Coal	300	No. 5 PP	2-Aug	Oct	Regular maintenance
Shenhua Ningxia Coal	300	No. 6 PP	2-Aug	Oct	Regular maintenance
Zhongjing Petrochemical	350	No. 1 PP	1-Sep	16-Sep	Regular maintenance
Shenhua Baotou	300	No. 1 PP	1-Sep	30-Sep	Regular maintenance
Zhong Tian He Chuang	350	No. 2 PP	14-Sep	unknown	Regular maintenance
Fujian Refining& Petrochemical	220	No. 3 PP	18-Sep	25-Sep	Unexpected maintenance
Yangzi Petrochemical	140	No. 1 PP	20-Sep	25-Sep	Regular maintenance
Yangzi Petrochemical	80	No. 2 PP	20-Sep	21-Sep	Unexpected maintenance
Yangzi Petrochemical	200	No. 3 PP	20-Sep	21-Sep	Unexpected maintenance

“Some small BOPP [biaxially-oriented polypropylene] film factories may shut down as they couldn’t purchase PP in the market amid limited PP supply,” a trader in east China said.

Downstream demand had stayed flat in the past months but this week demand grew as downstream producers need PP stocks for production during Mid-Autumn Festival followed by China’s National Day holidays that will fall on 22-24 September and on 1-7 October respectively.

“We need to stock more feedstock for the upcoming holidays,” a factory source said.

Imported PP flat yarn prices were stable at $1,200-1,220/tonne CFR (cost and freight) China in the week ended 14 September, according to ICIS data.

This week, deals at $1,230/tonne CFR China were already widespread in line with the soaring domestic prices though gain in the import market was just around $10/tonne CFR China, which is much less than gains in the domestic market.

Focus article by Dora Xue