Petrotahlil :The downturn has gained speed in China’s import PP market since August with homo PP prices hitting more-than-two-year low recently. Having broken below the $1000/ton threshold last week, more homo PP offers have shown up this week at $980-990/ton CIF for regular origins, remaining indifferent to higher futures prices in the local market so far.
PP futures rise for third straight session
January PP futures on the Dalian Commodity Exchange have posted gains for the third straight session on September 3, indicating a total increase of CNY245/ton ($34/ton).
Higher PP futures were mainly driven by China’s two major producers’ decreasing polyolefin inventories.
Demand persistently muted
Muted demand has been one of the major concerns of PP players in China since the start of 2019, maintaining pressure on the market.
Now that the Golden Week,which corresponds to the first week of October and lasts for a week- is approaching, market activities are expected to slow further down in the days ahead.
Falling yuan, tit-for-tat tariffs keep buyers cautious
The sharp depreciation of Chinese yuan against the US dollar has hindered buying interest for import cargoes, with buyers refraining from fresh purchases in order to avoid currency risks.
The uncertainty driven by the re-escalation of trade tensions with the US has also reinforced the cautious mood in the market.
Import homo PP below $1000 prevails but fails to stir demand
Following a major Saudi producer’s announcement of a stable to softer pricing for September, homo-PP raffia offers below the $1000/ton CIF China threshold have been widely available in the market for most origins lately.
The weekly average suggest the lowest levels seen since June 2017.
Nevertheless, steady drops in prices have failed to boost demand so far.
Local PP largely steady so far this week
The local homo-PP market, meanwhile, followed a largely steady trend or posted small decreases so far this week, defying the impact of higher futures amid lower inventories.
Does outlook suggest further weakening?
“Import PP prices have continued to lose ground this week despite higher futures. Although a slight improvement in the market is within the realm of possibility given the fact that September is the high-season for PP applications, expectations on the long-term outlook remains bearish considering the concerns over new PP capacities in China , weaker global economy along with the ongoing trade tensions,” a few traders lamented.
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