China’s polymer markets squeezed between high costs and poor demand

01-Mar-12
Polymer markets have been firm since the beginning of 2012 in China with sellers attempting to raise offers for PP, PVC, PE and PS products due to the cost pressure from the upstream markets, as per ChemOrbis. Nevertheless, demand has been unsatisfactory, failing to meet the expectations of a rebound post-Chinese New Year celebrated at the end of January. This has paved the way for regional and overseas suppliers to shift their allocations to other markets. While a new round of price hike targets are emerging for March on the back of the persistent push from the cost side as well as limited supply for some products, many converters and distributors comment that they are cautious of stock piling at the new higher levels given their poor end product businesses and lack of confidence about the market outlook unless. Most buyers prefer to buy on need basis only. Even rising crude oil prices, that neared US$110/bbl at the end of last week almost after a year, have failed to tempt most Chinese buyers back into the market. Major producers and traders confirm the stiff resistance built on the buyers’ side. All the same, import suppliers are voicing their intention to divert focus to other places rather than step back from hike targets, as it was the case last month, as per ChemOrbis. When looking at the local market in China, domestic producers as well as distributors also admit that their sales are quite slow. Nevertheless, they still do not want to give large discounts. In the case of PS, some producers prefer to hold their prices stable in order to smoothen sales amidst thin buying interest although other sellers raised their offers due to rising cost pressure. In the PVC market, some domestic producers smanaged to conclude more deals after surrendering to some slight discounts. Indeed, the domestic PVC market is trading at a discount when compared to imports and thus, buyers prefer to meet their requirements from the domestic market when possible. In the local PP and PE markets, sellers are holding their offers stable for now while a domestic producer has reportedly lifted its LLDPE prices recently. Nonetheless, price cuts for PP and PE were surfacing both from distributors and producers inside China only a week ago. The delta between import PP and PE prices and domestic prices is narrowing with the domestic market losing its premium over imports and starting to offer respectively competitive prices. This is because the domestic market cannot catch up with the firming pace of import prices. In general, as the polymer markets are seen squeezed between high costs and unsatisfactory demand in China, the trading activities are mostly reported to be stalled with players preferring to take a wait and see stance. They generally argue that any price cut is not seen possible in the near term considering the fact that the upstream chain is maintaining its strength. However, they also do not think that large price hikes are likely to materialize as long as demand retains its sluggish stance. Therefore, a stable to firm trend is expected to be seen over the near term with prices fluctuating in a narrow range.
  More News  Post Your Comment
{{comment.Name}} made a post.
{{comment.DateTimeStampDisplay}}

{{comment.Comments}}

COMMENTS

0

There are no comments to display. Be the first one to comment!

*

Name Required.

*

Email Id Required.

Email Id Not Valid.

*

Mobile Required.

Email ID and Mobile Number are kept private and will not be shown publicly.
*

Message Required.

Click to Change image  Refresh Captcha