Following brisk trading activities in the first two weeks of January amidst higher prices both on an import and local basis, PP and PE markets have started to wind down in China ahead of the Chinese New Year holiday, as per the pricing service of ChemOrbis. This situation has found an immediate reflection on domestic offers as some sellers have had to step back from their previously hiked offers. Inside China, weekly price decreases of CNY50-300/ton ($8-48/ton) are seen in the PP market, where the prevailing locally-held PP prices have come back to the levels seen at the beginning of January.
A toy manufacturer based in Shantou said, “Some buyers are beginning to wind down their business as the Chinese New Year approaches. We are not planning to make any fresh purchases for now as we believe that market activity will remain subdued before the holidays.” A woven sack manufacturer also commented, “We have concluded our PP purchases for the holiday period and now we are taking a wait and see stance. We are not planning to buy more import cargoes unless we catch an attractive price.” The buyer also mentioned that the domestic PP market is still offering much more competitive prices than the import market.
Lower domestic prices have inevitably affected the sentiment in the import market. According to players, some traders are showing a willingness to give discounts on deals, although other sellers are standing firm on their prices on the back of firm crude oil and propylene prices as well as limited supplies. “We are planning to shift our cargoes to Southeast Asia next week, when the Chinese market will be slower,” a trader commented.
A similar situation has also been in place in China’s PE market, where domestic producers are said to have cut their offers by slight amounts, as per ChemOrbis. However, unlike the PP market, PE buyers are yet to complete their purchases. “As we have stocks to run down for now, we have not engaged in fresh purchases recently; however, now that domestic producers cut their offers, we are now waiting to see lower prices for firm bids,” commented a packaging manufacturer based in Xiamen.
A trader in Shanghai also said, “We are willing to negotiate prices for firm bids but we are not rushing to give large discounts due to our low stocks levels.” Pointing to falling local prices, the trader prefers to wait for a while before making new purchases in anticipation of a soft outlook for the near term. “Particularly when Iranian cargoes arrive, supply concerns will be relieved,” he added.
On the other hand, a Hong Kong based trader defied the softening talks and said, “Demand will be back after Chinese New Year and there is no chance for prices to soften when both HDPE and LLDPE are tight.” He also mentioned that global producers are keeping their run rates low in order not to flood the market with lots of materials.