After a week long break for its National Holidays, Chinese PE and PP buyers bounced into the markets to restock. China, the world’s number one importer of polyethylene (PE) and polypropylene (PP), set the global markets in momentum as polymer trade showed signs of recovery due to restocking activities since reopening as per ICIS. Inventory levels that depleted when China broke for its week long holidays amid rising crude oil futures pas US$70/bbl over the past two weeks have driven post-holiday buying.
Benchmark film grade high density PE (HDPE) prices bounced back to US$1140-1145/ton CFR China, with over 10,000 tons sold by two Asian producers for November shipment at US$20-45/ton higher than last weeks levels. Linear low density PE (LLDPE) also increased by 20 dollars since last week to post increases on Monday at US$1165/ton CFR China for November shipment. PP imports were less exciting, with a South Korean producer selling injection and yarn grade at US$1080/ton CFR China, steadying at pre-holiday levels. Strong domestic PP prices were propelled by a steep hike in domestic propylene feedstock values by yuan 350/ton.
This sudden frenzy in buying activity can also be attributed to a general herd mentality. Market sentiment was cautiously optimistic amid the gradual rise in trade volumes and the prices for some grades. Concerns abound that the current uptrend might fade away on added supplies that will flood the markets from the recently started plants in China and the Middle East. Also compounding the supply situation is the possibility of more deep-sea supplies flowing to China in the coming months, based on current offers.
New plants such as Fujian Refining and Petrochemical Co (FREP) and Dushanzi Petrochemical in China, and PetroRabigh in Saudi Arabia are expected to add to regional supply, possibly capping bullish sentiment. FREP has a new 800,000 tpa PE unit and a 400,000 tpa PP unit, while Dushanzi Petrochemical's new facilities comprise a 550,000 tpa PP plant and a 900,000 tpa PE plant. PetroRabigh’s capacity comprises a 900,000 tpa PE plant and a 700,000 tpa PP plant.