China PP rallies on demand spike for face masks amid coronavirus pandemic

SINGAPORE (ICIS)–China’s domestic polypropylene (PP) prices have rallied since end-March, driven by spiking demand for downstream face masks amid the coronavirus pandemic, while supply of some grades has tightened partly due to scheduled plant turnarounds.

On 10 April, spot prices of PP yarns, injections and low melt-index block copolymers in east China stood at yuan (CNY) 7,425/tonne; CNY7,500/tonne and CNY7,650/tonne, respectively, according to ICIS data.

The prices have rebounded by nearly CNY1,142/tonne or an average of 18% from lows recorded in end-March, the data showed.

Overseas demand for face masks has been surging as global coronavirus infections reached 1.7m, with the death toll at above 100,000. The outbreak is believed to have emerged late last year in Wuhan in central China.

With a growing number of people across the world wearing face masks as protection against infection from the flu-like virus, demand for PP fibres was consequently boosted.

PP fibres with a melt index of 35-40 make up the outer layer of face masks, which typically comprise two layers of fibres and middle melt-blown material, according to experts.

For major producer Dushanzi Petrochemical, offers for its S2040 PP fibres reached as high as CNY25,000/tonne, according to market sources.

Booming demand and high margins have prompted China’s domestic polyolefin producers to start switching to producing PP fibres since late March.

A total of 28 domestic PP plants in the country with a total capacity of 6.53m tonnes/year – about 26% of China’s total capacity for the polymer – have made the switch to producing high melt-index PP fibres, according to industry sources.

More production of PP fibres has squeezed supply for other general-purpose grades further, triggering the price uptrend.

A number of PP plants in China are due for maintenance in the second quarter.

Focus article by Aviva Hu

($1 = CNY7.04)

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ICN