China key petrochemical markets gain after week-long holiday

Source: ICIS News


SINGAPORE (ICIS)--China’s key domestic petrochemical markets opened strong in the week on firm demand following the country’s long holiday.

Qingdao port in China (Photo by WU HONG/EPA-EFE/REX/Shutterstock)

On 8 October, polypropylene (PP) prices were bolstered by gains in the futures markets, while polyethylene (PE) values increased amid lower-than-expected inventory levels.

At the Dalian Commodity Exchange (DCE), the January 2019 PP surged 4.11% to yuan (CNY) 10,386/tonne; while linear low density polyethylene (LLDPE) futures rose 2.7% to CNY9,715/tonne.

Prices were compared with their closing levels on 28 September, as China’s markets were closed on 1-7 October for its National Day celebration, also termed as Golden Week.

Chinese petrochemical majors PetroChina and Sinopec hiked their PP list prices in east China by CNY150-200/tonne for a wide range of grades.

For some low density (LDPE) and high density (HDPE) specifications, the two companies also raised their prices by CNY100-300/tonne.

Spot domestic PP prices in east China rose by an average of CNY125/tonne from end-September to CNY9,450-9,900/tonne on 8 October, according to ICIS data.

In the aromatics markets, offer prices for both toluene and xylene had notable increases due mainly to crude oil price gains and relatively tight supply during the holiday period.

Crude prices spiked to their highest levels in four years last week, with Brent at above $86/bbl and WTI hitting above $76/bbl on 3 October.

At midday on Tuesday, Brent crude was up 39 cents/bbl at $84.30/bbl, while US crude increased 32 cents/bbl to $74.61/bbl.

Trading companies in China appeared reluctant to sell aromatics, while buyers have increased offers.

For toluene in the Jiangsu market in east China, spot discussions were at CNY7,030-7,120/tonne on 8 October.

In the benzene market, however, market players stayed mostly on the sidelines, with sellers tentatively pushing up offers amid scant discussions.

Overall market liquidity may improve in the near term as China will release a total of CNY1,200bn into its financial system on 15 October via a one-percentage point reduction in banks' reserve requirement ratio (RRR).

The net cash injection of CNY750bn from the RRR cut is meant to boost China's domestic economy as its exports will likely take a strong hit from the country's escalating trade war with the US.

Additional reporting by Nurluqman Suratman and Pearl Bantillo

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