China PO downtrend may continue on propylene slump, weak demand

20 April 2017 05:14 Source:ICIS News

sofa 20 April

SINGAPORE (ICIS)--China’s domestic propylene oxide (PO) prices may continue falling, in line with the slump of feedstock propylene values and amid weak demand, market sources said on Thursday.

At the close of trade on 19 April, prices were assessed at Chinese yuan (CNY) 9,250/tonne DEL (delivered), down by around CNY1,500/tonne or 13% from a week ago, according to ICIS data.

Downstream furniture plants have been running at reduced capacity for a prolonged period due to cost pressure and amid ongoing environmental inspections, an industry source said.

This in turn weighs on demand for polyether polyols – the main downstream for PO.

“Downstream users have adopted a wait-and-see stance, and are buying small volumes on need basis. It’s difficult to sell PO from last week,” a trader said.

PO prices could fall below CNY9,000/tonne this week as producers’ raw material cost has dropped by nearly (CNY) 1,300/tonne amid falling propylene prices, a downstream user said.

Prices of feedstock propylene have slumped by (CNY) 1,525/tonne from end-February to CNY6,300/tonne ex-tank on 19 April, according to ICIS data. 

China PO price chart 20 April
Source: China editorial team at ICIS

Picture (top): Propylene oxide's downstream industries include furniture. (Source: WestEnd61/REX/Shutterstock)

($1 = CNY6.89)

By Jady Ma