China market: Local homo-PP supply tightens in spite of plants start up

This week, two major PP producers in China have restarted their production lines after major maintenance shutdown taking place since May 2016; however, players in the country are still struggling with tight homo-PP yarn supply condition.

Market informed Shenhua Ningxia Coal Industry Group’s 1 million ton/year PP (MTP) plant has resumed production, however, it is unclear on the cureent operating rate. The supplier reportedly focuses more on online auction activities, resulting in reduced allocation to the spot market. Meanwhile, Ningxia Baofeng Energy’s 300,000 ton/year of coal-based PP plant is producing copolymer-PP grades.

CommoPlast data shows that domestic homo-PP prices have increased for two weeks in a row, making up CNY400/ton ($61/ton) in total, on the back of limited availability. A trader commented, “We are not expecting local supply to ease in the near term given several other plants are going off again in July. This could remain one of the strongest support for sellers to continue push up prices in the near term.”

Local homo-PP prices in China are now reported at CNY7050-7400/ton ($915-960/ton without VAT), all based on EXW China, cash term.