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Spot powdered polypropylene prices in China fell by about 11%

December 09/2011

(ICIS) -- Spot powdered polypropylene (PP) prices in China fell by about 11% since early November, as sellers are under pressure to shave down their high inventory of the material, market sources said on Friday.

Bids and offers were quoted at (CNY) 9,700-9,900/tonne (USD1,523-1,554/tonne) EXW (ex-works) in Shandong on Friday, down by about CNY1,175/tonne from CNY10,950-11,000/tonne in early November, they said. The negotiation levels are hitting the lowest [on] record in the second half of this year, said a Shandong-based producer. Mounting inventory levels have caused panic-selling for some market players, said another producer from Zhejiang.

Spot powdered polypropylene prices in China fell by about 11%

Demand for powdered PP was extremely low from its major downstream - the woven-bags industry - and this has led to a continuous decline prices of feedstock propylene, said a source from Dongming Petrochemical Group.

About 80% of Chinas powdered PP consumption goes into the production of woven bags. Buyers are currently procuring powdered PP cargoes on a need-to basis, taking into account actual demand.

Xianchao Packaging, a major Zhejiang-based woven bags maker in China, is cautious about stocking up on feedstock, anticipating a labour shortage leading to the Lunar New Year festivities in China in late January, said a company source.

The gloomy global economic climate going into next year is also weighing down on overall market sentiment in the powdered PP sector, some plastics processors said.

Prices of feedstock propylene in China were assessed at CNY9,150-9,300/tonne ex-tank in Shandong on Thursday, down by 19.43% from 9 October, according to Chemease, an ICIS service in China. Propylene values will likely continue falling in the coming weeks because of persistently weak demand, market sources said.

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