Trade barriers could tame Chinese petrochem demand post Lunar New Year break

05-Feb-10

Prices of select petrochemical products in Asia have been on a downtrend in the absence of a major demand. China’s petrochemicals markets were lacklustre ahead of Lunar New Year celebrations. Though market demand is expected to revive post-holidays towards late February, it may be subdues as compared to the recent past as trade barriers get raised. As per ICIS, a spate of trade barriers in the form of antidumping duties currently in the works in China, as well as the credit tightening measures implemented by its government. Demand will gradually turn better as the spring [February to May] is a peak season for some chemical downstream sectors. Restocking will drive up demand post-holidays as most players refrained from building up stocks even after their inventories had sunk to a minimum level amid strong prices. Much of the buying in China has been among traders and end users still hold rather low inventories. Hence prices are expected to rise again when they return to the market.