Morning Briefing - 24 Jan. 2025
CommoPlast
Morning Briefing
24 January 2025
Brent: $78.29 (- $0.71)
WTI: $74.62 (- $0.82)
Naphtha CFR Japan: + $1
Ethylene CFR NEA: Stable
Ethylene CFR SEA: Stable
Propylene FOB Korea: Stable
Propylene CFR China: Stable
*Data represent closing prices of the previous trading day
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With the Chinese market poised to shut down for the weeklong Lunar New Year holiday from 28 January to 3 February 2025, CommoPlast examines the pre-holiday destocking activities of Sinopec and CNPC to assess the potential inventory pressure upon the market's reopening.
As of 24 January, data indicates that the combined PP and PE inventories at Sinopec and CNPC have reached a historic low of 450,000 tons for this time of year. However, with logistics companies halting new bookings and no further deliveries expected in the remaining trading days, the inventory level is projected to swell to approximately 750,000 tons once operations resume on 4 February.
Should this projection materialise, Sinopec and CNPC could face heightened sales pressure. Yet, given the relatively modest scale of the estimated buildup, the pressure appears to remain within manageable limits, at least for these two producers.
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International suppliers could potentially offset seasonal lulls in China and Southeast Asia by tapping into the Indian market, where demand for PP and PE has shown tentative signs of improvement over the past week. However, buying activity remains cautious, with Indian buyers being selective regarding grades and pricing.
On the bright side, market sources expect trading sentiment in India to improve further in the weeks ahead, which could influence the market trajectory in China and Southeast Asia at the beginning of February.
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