SINGAPORE (ICIS)--High-density polyethylene (HDPE) pipe prices in China have gained ground, finding support from peak consumption season as downstream construction activities resume during warmer weather, and tight supply.
Major domestic producer PetroChina hiked its offers in north China on 11 May for PE pipe natural colour HDPE100 to yuan (CNY) 8,300/tonne. Its offers are up by CNY800/tonne ($113/tonne) from 24 April after four rounds of price increase.
Spot prices of the material have started rising in the last week of April and were assessed on 9 May at CNY8,450/tonne, up by 13.4% from 24 April, ICIS data showed.
Downstream producers ran at low rates in the first quarter of 2020 as a result of coronavirus-linked suspension of infrastructure construction.
However, they have been back to normal operation as infrastructure construction gradually recovers due to easing fears over the coronavirus pandemic after March.
Most infrastructure construction projects have been accelerated, boding well for the HDPE pipe market.
China is launching a “New Infrastructure” campaign to stimulate the economy and boost domestic demand, focusing on seven sectors: 5G networks, ultra-high voltage, inter-city high speed railway, inner-city rail systems, new energy vehicle charging pile, big data center, artificial intelligence and industrial internet.
The campaign is expected to drive up demand for pipe materials.
The second quarter is typically the peak demand season for pipe materials demand, as most construction works start in the spring, especially in north China, where water conservation projects are under way.
North China is in short supply of HDPE pipes amid strong demand, and this tight supply condition is exacerbated by a scheduled maintenance at Sinopec SABIC Tianjin Petrochemical’s plant which started on 9 May.
Cargo deliveries from PetroChina’s refiners, which are mainly located in northwest and northeast China, to other regions are recently delayed.
In addition, some traders had pre-sold cargoes due to sluggish market and are now seeking spot cargoes to fulfill orders, further tightening supply.
Focus article by Lucy Shuai
($1 = CNY7.08)
Visit the ICIS Coronavirus topic page for analysis of the impact on chemical markets and links to latest news.