China PP, PE markets join global rally after Lunar New Year holiday
During China’s week-long absence due to the Lunar New Year holiday in mid-February, the tightness-driven hikes in global PP and PE markets were reinforced by higher energy values as well as winter-related supply disruptions in the US Gulf.
In Europe, PP and PE markets set for the 5th bullish month in March while PP prices shoot up to surreal levels in Turkey. PP prices in Southeast Asia also witnessed sharp hikes after the long holiday and a similar firming scenario was in place in Egypt’s local PP, PE markets.
China PP and PE markets; before and after the holiday
PP and PE prices in China were already on a firm note before the long holiday as supply curtailments for import cargoes and the last-minute purchases boosted the markets while expectations for the post-holiday period were also calling for a strong start.
Middle-East origin prices for both PP and PE grades have witnessed notable gains in China after the holiday, mirroring the global trend.
PP sees up to three-digit changes
When compared to pre-holiday levels, homo-PP raffia, and inj. prices for Middle Eastern origins have climbed $110-120/ton to $1180-1210/ton CIF China, cash. As for PPBC inj., relatively smaller gains of $70-100/ton have been in place, with prices standing at $1230-1250/ton with similar terms.
PE grades post similar amount of increases
When compared to pre-holiday levels, LDPE film prices for Middle Eastern origins have increased $80-90/ton to $1440-1450/ton CIF China, cash. As for HDPE and LLDPE film, prices have gained $70-90/ton and $80/ton to respectively stand at $1090-1100/ton and $1090-1110/ton with similar terms.
Intensifying tightness strengthens sentiment
As several US producers were forced to declare force majeure on PE and PP outputs from their plants in Texas, global supply tightness was exacerbated.
Together with the planned shutdowns in the Middle East, Europe and Asia, and a deepening shipping crisis that has been crimping trade flows since last year, global polymer markets had no option but to slip into one of the most chaotic times in the history.
Intensifying supply tightness on the back of the planned/unplanned production cuts across the globe has found an immediate impact on polyolefin prices in China as well.
Rising oil prices boost Dalian futures
After Dalian Commodity Exchange reopened on February 18, May PP and LLDPE futures settled higher for three consecutive trading sessions until February 22; gaining a total of CNY1369/ton ($212/ton) and CNY1355/ton ($210/ton) respectively.
These visible gains in Dalian futures were mainly attributed to rising oil prices. Both WTI and Brent oil futures traded visibly higher since early this week, around the thresholds of $66.00/bbl and $61.00/bbl, respectively. ChemOrbis Price Wizard shows that both crude futures are hovering at around 13 month-highs.
On February 23, meanwhile, LLDPE futures settled CNY90/ton ($14/ton) lower from the previous trading session, witnessing a slight correction after steep gains. PP futures, meanwhile, were unchanged.
Supply pressure inside China moderate amid improving demand
According to market sources, two major Chinese producers’ combined polyolefin inventory levels were standing at 940,000 tons on February 18, the official end date of the Lunar New Year holiday. As this level was relatively lower compared to last year when China returned from the holiday, supply pressure this year was deemed lower than expected.
On February 23, meanwhile, the inventory level gradually moved down by 50,000 tons to stand at 890,000 tons, reflecting the healthy post-holiday demand inside the country.
