China PP prices to soften from the quarter starting October
In the China polypropylene (PP) market, supply is expected to increase going forward since many facilities are scheduled to start up by September. Further, feedstock propylene prices are seen to fall in the future and PP prices might be bearish from the quarter October to December onwards.
In China, demand for export was firm until April and the market was at high levels. The US was hit by hurricanes in late February and many polyolefin facilities were shut down. Along with this, supply was in shortage and cargoes were imported from overseas including China. On the other hand, in China, new facilities started up from May onwards and supply volumes in the country increased while operating rates at downstream product facilities were reduced due to shortage of power in southern areas. Polyolefin facilities in the US gradually restarted and buying interest for imported cargoes receded. For this reason, supply is perceived to be in surplus.
Regarding new PP facilities, Oriental Energy's second line started up by June. Meanwhile, the startup of Qingdao Jinneng, Gulei Petrochemical, Zhejiang Petrochemical's second line and Tianjin Bohai was postponed but these facilities are scheduled to start up by the quarter July to September. Therefore, supply in the quarter October to December is seen to be ample.