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Following the Mid-Autumn Festival, key Chinese PP producers resumed export offers on a stable to firmer note, despite tepid demand from overseas markets. However, several structural factors, including squeezed production margins and the appreciation of the Yuan against the US dollar, have significantly constrained the ability of these producers to make aggressive price adjustments.

The latest price range and changes week-on-week are as follows:

One producer noted the increasing pressure from Southeast Asian buyers seeking prices on a CIF basis that are well below current FOB offers. "These bids are unrealistically low, making them unacceptable at this stage," the producer commented.

Despite the subdued domestic demand and mounting pressure to meet sales targets ahead of the National Day holiday, Chinese suppliers remain resistant to large discounts, citing the already narrow margins.

Based on prevailing market conditions, spot homo-PP yarn cargoes are theoretically priced at $995/ton on CFR terms, given the propylene cost of $845/ton and a conversion cost of $150/ton. However, few transactions have been successfully concluded at these levels in Southeast Asia, highlighting the difficulty sellers face in the region.

Meanwhile, Chinese traders realized the challenges facing the export market and preferred to wait for the opportunity window to present itself, expected by mid-October. One trader remarked, "Negotiations with overseas buyers have largely stalled. Nevertheless, we anticipate that the inventory buildup during the Golden Week could push our principal suppliers to reconsider sharper price reductions in mid-October."

Written by: Kat Yun Yun

Edited by: Rochelle Nguyen

Country
China