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As the National Day draws near, Chinese buyers are speeding up their restocking activities to ensure the inventories levels before departing for the long holidays. In spite of improved buying interest, what underlines the market at the moment is still a strong sense of caution, which is reflected in the fact that most deals concluded are bounded to domestic cargoes only. Import material remains unattractive amid cloudy medium term outlook.

A domestic trader reported, “We maintain our offers mostly stable today and managed to close a good number of deal, just that buyers continue to purchase in small quantity. We fear this condition might sustain throughout the post-holiday term as market confidence seem diminishing amid the start up the new coal based plant.” Yet, sellers are not showing the urge to cut offers, as they believed that buyers would need to replenish material due to low stock on hand.

A converter added, “We only replenish sufficient cargoes to cover production need in the next two weeks. Our end product business is still weak while we are having some previously purchased cargoes from international suppliers to arrive soon.” The source added that weakening local currency is making it more expensive to buy from the import market, while softened propylene costs could signal a less optimistic trend in the near term.

Meanwhile, steady demand from the agriculture film sector is keeping the PE market on the firm track, yet prices at the upper end of the overall price range are facing stiff resistance. A trader in northern China informed, “Purchasing activities for LDPE film is still good on the back of limited availability. This has been in place for nearly two months and might go off soon on the restart of major domestic plants. We offered a small discount for CNY50/ton ($8/ton) on deal today.”

Players are expecting that buyers would continue to make purchases throughout the first half of this week and market might turn quiet toward the second half of the week as buyers take off for the holidays.