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Domestic PP trading at a discount to imports in China

by ChemOrbis Editorial Team - content@chemorbis.com
  • 05/11/2015 (03:34)
According to players in China, domestic homo-PP prices are trading at a discount to imports as sufficient supply levels stemming from large additions of new coal based capacities are weighing down on the domestic market even as overseas sellers attempt to maintain a firm stance on pricing in line with developments in other major global markets.



According to data from ChemOrbis Price Index, domestic homo-PP prices on an ex-warehouse China basis are currently trading at a discount of around $25/ton compared with import prices on a CFR China basis, the steepest discount seen since June. ChemOrbis data shows that domestic prices have been declining steadily since the end of August, when domestic prices carried a premium of more than $90/ton over import cargoes. Domestic prices have lost nearly 14% of their value since the end of August while import prices have edged down only 3% over the same period.

A plastic cup manufacturer reported purchasing domestic raffia at a price CNY300/ton ($47/ton) below their supplier’s initial offer levels. “PP prices are down to their lowest point of the year in the local market. We remain bearish regarding the outlook for PP prices, although we feel that prices will not see further steep declines as producers’ margins would be threatened by additional large decreases. Demand for our end products is not as strong as we would like,” the buyer stated.

A woven sack manufacturer also reported purchasing domestic raffia with a discount from their supplier’s initial offer levels. “We are seeing healthy demand for our end products as it current a high season for sacks, although our business is not as good as it was at the same time last year. We are only purchasing on a needs basis for now while we believe that PP prices will stabilize soon as producers’ margins are suffering from the steady downward trend in pricing,” the buyer commented.

A source from a domestic producer reported, “We reduced our prices this week but we feel that prices may still have some room to come down, although we feel that the market is likely to reach the bottom before the end of the month.” A trader offering in the import market said that prices are down around $20-30/ton on the week, adding, “There is plenty of material in the market and this is putting some downward pressure on prices. We hear that some coal based producers are looking into export opportunities in Southeast Asia owing to ample local supply.”
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