Improving sentiment in China’s domestic polymer market as April approaches

23-Mar-10
Inside China, domestic offers for many polymer products deteriorated throughout March as slower-than-expected post-holiday demand burdened many sellers with excess stock levels which they have been steadily working off throughout the month, as per Chemorbis. Declining prices in China’s domestic market have taken a toll on price of imports. Import prices are likely to continue to face downward pressure from domestic markets over the near term, as currently import prices are pegged higher than domestic prices as they have not declined as fast as local prices over the past few weeks. As the month draws to a close, China’s domestic markets have witnessed signs of improvement. After several weeks of destocking, distributor stock levels in China have declined to more manageable levels after several weeks of destocking, at a time when many converters will need to replenish stocks shortly since they have been abstaining from purchases for some time. Also, demand is expected to improve in April. Also theoretically, prices do not have much room to fall further as at current levels, prices are operating perilously close to cost levels. In the PP market, sentiment began to shift in the middle of last week, with distributors either leaving their offers unchanged or even attempting slight price increases. As of yet, trading activities in the local market have not seen any significant improvement, although converters are taking a greater interest in the market, with several buyers reporting that they plan to make some purchases over the short term if local prices continue to gain ground. A similar dynamism has been active in the PVC market, where local offers have been on a steady to firm trend since the middle of last week. Sellers report that trading activities have picked up recently as buyers have returned to the market to make more purchases after the declines of the past few weeks. Sellers also commented that they cannot afford to give any further discounts on their offers owing to persistently firm upstream costs. Stronger demand expectations for April along with increasing styrene feedstock costs have also stabilized domestic PS prices in the Chinese market. After being forced to agree to large discounts from their initial offer levels to conclude deals last week, sellers now report that they expect prices to remain stable at the new done deal levels for the remainder of the month, citing higher styrene feedstock prices as support for their steady pricing strategies. On the converters’ side, buyers also comment that they are not expecting to see any further price decreases over the short term, with several converters adding that they have recently purchased some materials in order to cover their immediate needs.
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