Import prices have gained slight ground since April started owing to limited cargoes from overseas suppliers. The relatively improved demand following the VAT cut as well as higher crude oil prices also contributed to the firming sentiment.
Restricted supplies from the Mid-East, India support PP
Import homo-PP raffia prices on CFR China basis have firmed up by around $12/ton on a weekly average when compared to the beginning of April.
The main driver behind the slight firming has been reduced supplies from Middle Eastern producers along with some turnarounds. Traders’ import offers for Saudi Arabian origins were up by $10-20/ton this week, reported players in China.
Besides, Indian sellers cut their allocations to major export markets including China and Turkey during the last couple of months due to maintenances and healthy domestic demand, which resulted in consecutive hikes on their local PP offers.
VAT cut boosted demand from Chinese buyers
China officially reduced VAT from 16% to 13% as of April 1, which encouraged manufacturers to return to the market in order to replenish their inventories.
Positive economic data also added to the improved sentiment as China’s GDP grew by 6.4% year-on-year in the first quarter of 2019, exceeding expectations of a 6.3% rise.
As another supporting factor, NYMEX (WTI) crude oil futures continued to hover at around a 6-month high despite this week’s fluctuations.
Local PP still under pressure from high stocks
Meanwhile, domestic PP prices have been indifferent to the slight rebound of imports. This was due to a series of factors including subdued demand, weaker futures on the Dalian Commodity Exchange and more-than-sufficient stocks at domestic producers. “Most converters have been sourcing only their needs. Scheduled maintenances failed to offset high domestic supply,” players affirmed.