China’s PP market opens the post-holiday period with decreases

In China’s PP market, both import and local PP prices have posted considerable declines in the first few days after the week-long National Day holidays as sellers’ hopes that demand would pick up after the holidays have failed to materialize. Converters are sticking to the sidelines for the present in anticipation of seeing further prices declines in the days ahead and have not yet been tempted back to the market by the significant increases which have been witnessed in crude oil prices over the past few days.

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Import homo-PP prices in China have fallen by $20-60/ton in the few trading days after the National Day holidays as sellers reported facing stiff resistance from buyers at prices standing towards the upper end of the pre-holiday offer range. Traders complained that buying interest has worsened rather than improved since the end of the holidays. A trader stated that they received an initial November offer level from a major Indian producer with a decrease of $30/ton when compared with the producer’s most recent October price levels. The producer’s new prices stand at the lower end of the import range.

Prices also moved lower inside China, where prices for domestic homo-PP and PP block copolymer fell CNY200-300/ton ($31-47/ton) in the first few days after the holidays, with distributors reporting that they managed to conclude some deals at prices close to the low end of the overall range. Domestic homo-PP prices are under downward pressure from falling import prices as they are currently carrying a premium of around $35/ton over the prevailing import prices after taking customs duties as well as an estimated $30/ton for clearing and handling costs into account. Distributors complained that demand continues to be hampered by monetary tightening measures in the country and that banks are becoming increasingly reluctant to grant letters of credit with deferred payment terms. Loosening supply inside the country has also been cited as a factor weighing down on prices as a number of domestic PP plants have resumed their operations recently following the end of the heavy PP turnaround season in China.