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China PE, PP likely to see fall in prices over excess supply and low demand

YarnsandFibers News Bureau 2014-09-24 15:00:00 – Singapore

The Chinese domestic market for polyethylene (PE) and polypropylene (PP) likely to continue seeing decline in prices into October, as scheduled plant start-ups of Ningxia Baofeng Energy’s plant will boost supply, with not much upturn in demand, according to industry sources on Wednesday.

China’s PE-PP capacity is due to increase by a total of 600,000 tonnes/year in October, with start-ups of Ningxia Baofeng Energy’s plants in the Ningxia Hui autonomous region. The new PE and PP plants have the same 300,000 tonne/year capacity.

Moreover, in the third quarter alone, China added 900,000 tonnes/year in new PE capacity, and 1.8m tonnes/year of PP capacity, bringing the total PE and PP capacities so far to 14.5m tonnes tonnes/year and 15.5m tonnes/year, respectively.

Some domestic new PE and PP plants which were put into operation in the third quarter of 2014 would also weigh on the market , including Shaanxi Yanchang Chinacoal Yulin Energy & Chemical, China Coal Shaanxi Yulin Energy & Chemical, Maoming Petrochemical and Shijiazhuang Refining & Chemical Co, an eastern-based trader said.

On 23 September PP flat yarn prices stood at CNY10,850-11,100/tonne, down by CNY300/tonne and linear low density PE (LLDPE) film prices for locally produced cargoes were assessed at yuan (CNY) 10,200-10,750/tonne ($1,661-1,751/tonne), down by CNY900-1,000/tonne from a month ago as per the data.

Tight credit conditions in China also continue to weigh down on the domestic market , industry sources said.

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