Sluggish market sentiments for PP in China

20-Jan-10

In China, PP sellers complain about the sluggish market sentiment as buyers are hesitant to make purchases amidst bearish crude oil prices and the price cuts from the domestic producers as per Chemorbis. This has resulted in most buyers preferring to wait in the sidelines for the moment. Tighter credit facilities coupled with impending Chinese New Year holidays are cited amongst the other reasons for the lethargic demand inside China. As of today, a domestic producer elected to cut their PP raffia offers by CNY250/ton (US$36/ton) and PP injection offers by CNY150/ton (US$21/ton), pointing to their sales pressure caused by lower distribution market prices and softer market sentiment. Meanwhile, another local producer elected to cut their offers by CNY100/ton (US$14/ton) for homo-PP in the east region of the country, in line with their other sales companies. Now, the distribution market level stands at CNY10550-10900/ton (US$1321-1364/ton without VAT) on ex-warehouse, cash including VAT basis for PP raffia and at CNY10700-11400/ton (US$1339-1427/ton without VAT) for homo-PP injection, indicating CNY50-300/ton (US$7-43/ton) and CNY100/ton (US$14/ton) decreases, respectively, compared to last week. Despite this softer sentiment, propylene prices in Asia tracked a firm trend over the week as they gained US$10-15/ton to reach US$1210-1215/ton on FOB Korea basis, which are expected to support the import market level for PP in China for now.