Chinese players share their outlook on the year ahead

Players in China’s polymer markets are expressing mixed forecasts for 2012. While there is general agreement that upstream costs will continue to support polymer prices, players hold divergent opinions about the macroeconomic outlook, as per ChemOrbis. Producer sources are generally confident that the macroeconomic outlook will turn around this year while traders and converters remain hesitant to commit to firm positions. A source at a major Chinese polymer producer reported, “We expect to see an improving macroeconomic situation for 2012. Recent economic news from the US suggests that America will achieve higher growth rates this year and we are confident that a solution will be found to the European sovereign debt crisis. Domestically, we believe that the Central Bank will reverse direction this year and move to encourage growth as the economy has started to slow down and inflation is no longer the most pressing problem confronting China’s economy. We believe that China’s polymer demand will see strong growth this year if the global economic outlook starts to improve. A source at a South Korean producer also expressed optimism for the coming year. “We believe that the Chinese government will pursue more pro-growth policies this year and that this will stimulate China’s demand for polymers. We hope to achieve better operating margins this year although we will remain cautious in our business until we see some definite signs of improving demand,” the source commented. A trader offering Saudi Arabian PE and PP reported, “We believe that prices will remain firm this year as political tensions in the Persian Gulf and a significant number of scheduled maintenance shutdowns will support higher prices. Demand will need to improve later this year if the current firmness in prices is to remain in place in the months ahead,” the trader added. A source from a large trading house commented, “Our outlook for 2012 is for prices to remain firm in line with stronger upstream costs. We will be more cautious with our purchases this year as we are not feeling sufficiently confident about the global demand outlook,” the source added as per the pricing service of ChemOrbis. A distributor selling South Korean polymers to China stated, “there are too many uncertainties on the horizon for 2012 for us to take a firm stance on the outlook for the coming year. We are planning to keep our stocks at low levels this year so as maintain maximum flexibility in the market.” A converter in the plastic bag and film sector stated, “We are not feeling very optimistic about the year ahead as we feel that demand from our European customers will remain depressed. We expect to see some increases in polymer pricing after the Chinese New Year holidays but we do not believe that these increases will prove sustainable unless global demand begins to pick up. Demand might improve in the second half of the year if the macroeconomic situation stabilizes, but we are not optimistic about the demand outlook for the first half of the year.” A trader stated, “We believe that demand will be worse in 2012 than it was in 2011. We believe that polymer prices will gain ground in February and March but that prices will begin to move lower again by April, although firm upstream costs and a large number of maintenance shutdowns should keep the size of the price decreases limited.”