Petrotahlil - Chinese producers and trading firms increased exports of polypropylene (PP) homopolymer products after the 11-17 February lunar new year holiday because of a severe shortage of supplies in the western hemisphere.
Some market participants expect China's PP exports of February-March loading cargoes to rise to 150,000-200,000t from around 30,000 t/month usually. The cargoes are mainly heading towards Turkey, Europe, south Asia and South America.
PP raffia export offers have surged to $1,350-1,360/t fob China, compared with $1,000-1,050/t fob China in late January.
Around 6.9mn t/yr of PP capacity in the US has been reduced or completely shut down because of a winter storm in Texas. This includes units at LyondellBasell, Ineos Olefins and Polymers, ExxonMobil, Formosa Plastics, Flint Hills Resources and Total Petrochemicals.
Major crackers in Saudi Arabia — the production hub for polymers in the Middle East — are going through their major February-April turnaround season, reducing PP supplies to Turkey, Europe and India.
The tightness in overseas markets has opened up the arbitrage window for shipments from China. Some Chinese producers and trading firms have been actively working on exporting cargoes. A major Chinese state-owned producer has secured a deal to export more than 10,000t of PP raffia. The buyer and destination are unclear.
PP raffia is trading at 9,300-9,400 yuan/t ex-China in east China, or $1,185-1,198/t on an import parity basis, today. Margins for export deals are currently higher than for domestic trades.
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