Softer domestic PP, PE prices put pressure on imports to China

25-Nov-11
Domestic PP and PE prices are tracking a softening trend inside China as the Chinese economy shows signs of cooling down, while overseas demand remains discouraging and confidence in the global economic outlook weakens, as per ChemOrbis. Softer local prices are exerting downward pressure on imports, calling into question earlier predictions of higher import PP and PE prices for December. Many players believed that the import market had bottomed earlier this month as Middle Eastern producers reported to have quickly sold out November allocations after implementing significant price cuts from October while crude oil prices climbed throughout the first half of the month before peaking at US$102.59/barrel on the Nymex on November 16. Lower crude oil prices in the subsequent days and a renewed wave of pessimism regarding the probability of a quick solution to the European debt crisis has pulled local prices lower over the past week. Domestic producers complain of facing stiff competition from lower distribution market prices amid some sales pressure as they need to achieve good sales over the coming week to meet monthly sales targets. A trader who received offers for Middle Eastern and South Korean raffia complained that, “import prices are facing downward pressure from cheaper distribution market levels these days. The offers we are receiving from the import market are stable to softer when compared with the past week.” Several overseas PP producers have announced their December prices with rollovers to increases from November, although sellers complained that their December prices are not meeting with much interest from buyers as most converters have retreated to the sidelines. Overseas producers commented that they are willing to negotiate on their prices with buyers placing firm bids as demand has not been as healthy as they had hoped it would be going into December. In the PE market, a Saudi Arabian producer announced their initial December prices for both HDPE and LLDPE film with significant increases from November. “Our prices are meeting with resistance and we have not been able to conclude many deals so far,” complained a source from the producer. “We are only purchasing in small amounts for now given lackluster demand for our end products,” commented a source at a converter manufacturing plastic bags. “We feel confident that we can obtain discounts from traders when purchasing material,” the source added.
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