Petrotahlil :Following an upturn of almost one month triggered by futures prices, China’s local PP market has turned to a stable to soft note recently. The sentiment faltered upon lower future prices as well as the fluctuations of crude oil.
Data from ChemOrbis Price Index suggest that the weekly average of homo-PP raffia and injection prices on ex-warehouse China basis has tracked a stable to slightly softer trend so far this week after three consecutive weeks of gains.
PP futures turn softer late last week
September PP futures on the Dalian Commodity Exchange witnessed a modest decrease of CNY57/ton ($8/ton) from a week earlier on July 17.
The futures market turned softer towards the end of last week, pushing PP buyers to the sidelines in anticipation of seeing some downward corrections on the high ends of the price ranges in the spot market.
Local supplies increase amid limited activity
A few traders operating in China reported that two major domestic producers’ overall polyolefin supplies have slightly increased when compared to last week to be currently standing at around 820,000 tons.
“Trading activities are limited since demand from end-product manufacturers remains disappointing. Import PP prices, meanwhile, have been unchanged so far,” a seller in Ningbo noted.
Fluctuation of crude oil also weighs on sentiment
WTI (NYMEX) crude oil futures have been chasing a volatile trend for the past three weeks, blurring the outlook for PP players and weighing on market sentiment.
August WTI crude oil plunged $1.96/barrel to settle at $57.62/barrel on Tuesday, July 16.
Upcoming capacities shape medium-term PP outlook
Apart from the bearish factors mentioned above, the upcoming capacities in China’s PP market are already playing a crucial role in shaping the outlook for the medium term. If H2 start-ups can be completed as expected, an additional capacity of around 5 million tons/year will be added to the country’s total PP capacity.
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