China PP prices rising on tight supply ahead of holidays

21 September 2018 04:17 Source:ICIS News

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

By Dora Xue