Local PP continues to move higher in China
Aug. 21, 2018
In China, the local PP market witnessed increases for the fifth consecutive week while the import PP market hovered around last week’s levels.
Local prices for homo-PP raffia increased further by CNY100/ton ($14/ton) on the low end from last week while the high end remained stable. PP futures on the Dalian Commodity Exchange continued to support the market despite slight fluctuations throughout the week. Several other factors including tumbling yuan amidst the escalating trade tension as well as limited local supplies and maintenance shutdowns also contributed to the current trend. A trader opined, “Local prices were higher this week thanks to strong futures market and falling yuan. There are shutdowns going on and two major local producers’ supplies are low given relatively better demand for local cargoes than imports. Considering them all, we expect the local market to remain firm in the near term.”
Import prices for homo-PP raffia prices were reported stable at $1220-1270/ton CIF, cash on a weekly basis. Depreciation of yuan continued to hamper demand for import cargoes while supplies remained limited. Firmer methanol and spot propylene prices in Asia also supported the sentiment. A Thai producer elected to keep its raffia offers to China stable this week while a trader noted, “Buyers are not interested in to make import purchases mainly due to the depreciation of yuan.”
In other news, as part of the latest round of China-US trade tension, China’s Ministry of Commerce published a revised list of US products that are due to be subject to an additional 25% tariff last week. The list contains 333 US goods including PP and propylene and the new tariffs are expected to enter into force on August 23.
PP prices are expected to sustain their stable to firmer trend in the days ahead with support from the aforementioned bullish factors. However, some players do not exclude the possibility of seeing a slight downward correction, citing that prices increased too much in a short period.