Asian polypropylene and polyethylene markets firm on disruption of local deliveries

09-Dec-10

The Asian polyethylene and polypropylene market firmed this week as disruptions of domestic polymer deliveries in China prompted demand for imported material, as per Platts. End-users and distributors in South China receive domestic polymer cargoes via trucks from North China and East China. Heavy snow has been disrupting traffic in North China since mid-November closing 11 highways in Northeast China's Liaoning province by end November. This has resulted in strong buying appetite for import materials there. In addition, polymer truck deliveries were disrupted amid a severe gasoil shortage in China. As China's factories are using gasoil for thermal power generation in order to cover a power supply shortfall from local governments, land transport companies were not able to purchase enough gasoil to sustain their truck delivery operations. Chinese cities are currently suffering an unprecedented shortage of gasoil as local enterprises turn to the fuel to generate electricity in order to keep operating during periods of power rationing. Some local governments in China are switching off electricity supplies as part of commitments to Beijing on energy conservation and emissions reductions. Film-grade high density polyethylene (HDPE) prices rose by ten dollars and were assessed at US$1275/mt CFR Far East Asia, while linear low density polyethylene (LLDPE) was assessed at US$1366/mt CFR Far East Asia. PP raffia/injection was assessed US$26/mt higher at US$1461/mt CFR Far East Asia, Platts data showed.