Final findings: G20 minimal impact on PP plants, intensely on downstream BOPP

As the G20 Summit is drawing near, the Chinese authorities - G20 Summit Construction System Quality Assurance Program of Work Environment has announced an official statement earlier this week naming plants in the host city of Hangzhou to have curtail run rate during the event. Interestingly, there are only two major PP plants in the area are demanded to adjust production rate, which is far less than the initial plan.

Accordingly, the two PP plants affected are Ningbo Formosa and Ningbo Heyuan (Fund Energy) with detailed information shows in following table. The compulsory shutdown period is from 26 August – 6 September 2016.

With these plants being affected, it resulted in an estimated production loss of about 40,000 tons, which players are seeing minimal impact on the supply condition.

Meanwhile, some 17 BOPP film converters around the Hangzhou area are demanded to shutdown for 14 days from 25 August to 7 September 2016. As a result, many buyers have suspended replenishment activities this week to avoid inventories risk. Players informed that BOPP film sector is current in the slack season and these shutdowns might support end product business, however, there is a possible adverse impact on the resin sector.

As of this week, PP buying activities in east China is slowing down and might worsen during the Summit period. Risk is high, however, market is holding on hope that there would be a round of replenishment by second week of September.