Polypropylene prices fall in China as buyers exercise caution on global economic uncertainties

China's offers of imported polypropylene (PP) fell by 4.6% in the week ended September 30 due to lowered offers from Middle Eastern and Indian producers for October shipments, as per ICIS. These reductions are bait to entice buyers at a time when downstream markets are seeing weak demand. Buyers in China are expected to proceed with as much caution as they have been displaying in recent months based on global economic uncertainties. Benchmark injection and raffia (yarn) grades of PP were offered at US$1450-1480/ton (€1058-1,080/ton) CFR China in the week ended September 30 for Middle East cargoes for shipment in October. This is down from US$1500-1520/ton CFR China in the week ended September 23, as assessed by ICIS. One Middle East producer is reported to have dropped its offer by US$60/ton to US$1450/ton CFR China for cargoes meant for prompt lifting from ex-bonded warehouses, local Chinese traders said. These offers come on the heels of a reduced offer by an Indian major producer, who lowered price by US$70/ton to US$1450/ton CFR China, on September 26. Meanwhile, a South Korean producer is also reported to have lowered offer by US$10/ton, to US$1520/ton CFR China, for October shipment. Buying interest for imported PP in China has been poor for two reasons. First is the week-long Chinese National Day holiday, which began on October 1. And second is a new tightening credit policy announced by the Chinese government on September 19 and recently implemented. In addition, there has been poor domestic and re-export orders to the US and Europe, which weakened buying interest in PP even further. These import prices represent a nine-and-a-half-month low. On September 30, the price outlook for PP was uncertain. Some players said they expect further price declines because of the poor economic climate, and softer raw material costs. Other players, however, said that prices may not decrease as the integrated naphtha-based PP makers are still incurring negative margins and PP prices have already fallen by 6% in September alone.
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