Petrotahlil - Domestic prices of polyethylene (PE) and polypropylene (PP) in China rose after the country's National Day holiday, driven by robust demand for the upcoming year-end shopping season.
Low-density polyethylene prices increased by 300-500 yuan/t ($44-74/t) from before the holidays to Yn9,900-10,800/t ex-works as of 13 October, the highest level in the year.
Prices for other grades of PE, linear low-density polyethylene (LLDPE), high-density polyethylene (HDPE), PP raffia and PP co-polymer also rose by around Yn50-100/t ex-works in east China. LLDPE prices rose to Yn7,400-7,800/t ex-works, HDPE prices at Yn7,850-8,300/t ex-works and PP raffia prices at Yn8,100-8,300/t ex-works, all as of 13 October.
A strong upturn in plastics futures on the Dalian commodity exchange has further bolstered market sentiment. The most traded LLDPE and PP contracts both increased by 5pc from 30 September and closed at Yn7,470/t and Yn7,985/t respectively on 13 October.
The upticks in PE and PP prices were largely attributed to an upbeat outlook for year-end demand. Converters have been ramping up operations for the peak consumption season towards the end of the year, with the Double 11 shopping carnival on 11 November and New Year celebrations.
This year's seasonal demand has been stronger than a year earlier, said market participants. Some downstream factories already have full order books until the end of the year. Orders were mostly locked in with decent margins, accounting for converters' strong buying interest in raw materials.
Quick destocking activities also reflected robust demand. Inventories of PE and PP at China's Sinopec and PetroChina fell to 735,000t on 14 October, down by 180,000t from 915,000t on 9 October. Inventories at coal-to-olefin producers, Chinese main ports and converters are also declining quickly, according to market participants.
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Source : Argus