PP, PE prices hiked by Chinese producers on unsatisfactory margins

16-Mar-12

Domestic PP and PE prices moved higher in China this week as producers in China lifted their prices in an effort to restore their lost margins, as per ChemOrbis. Demand remains disappointing inside China as economic growth continues to moderate in the world’s second largest economy, but producers commented that they are insisting on their new price levels as they cannot maintain satisfactory margins at their previous prices. China’s import PP and PE markets were quiet this week as overseas producers wait in the sidelines while deciding on their April pricing policies. Traders generally left their offers steady on the week, commenting that the market is balanced between high upstream costs and lackluster demand. “We have had no choice but to raise our PP prices as our margins had fallen into negative territory following the recent significant increases in upstream costs,” a source at a domestic producer told ChemOrbis. A distributor also reported, “We lifted our prices this week in accordance with rising prices from domestic producers. Although demand remains disappointing, we have heard that producers will lower their operating rates rather than agree to any reductions on their current offer levels and that some producers have already implemented operating rate reductions.” A converter in the home appliance sector concurred, “Prices firmed up a bit this week. We are planning to purchase a small amount of material to keep our production going but will search the market for attractive prices before making any purchases. We plan to offer strong resistance to any further price hike attempts.” “Our sales are disappointing these days but we will not agree to any discounts on our prices as we need to achieve the full extent of our price increases in order to repair our margins,” reported a source at a domestic PE producer. A distributor followed saying, “We are feeling more confident about the market outlook given producers’ firm stance on prices. We are limiting our sales volumes for now as we feel that we will have to replenish at higher costs once we sell out our remaining stocks.” A converter confirmed the demand situation noting, “We are not interested in making any purchases for now as we feel that we will not be able to pass our rising raw material costs onto our end product prices. We are skeptical as to the medium-term feasibility of the recent price hikes.”