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China PE, PP prices may rise at the end of December

December 10/2010

(ICIS) -- Chinas polyethylene (PE) and polypropylene (PP) prices may rise at the end of December on restocking activity before levelling out in early January, industry players said on Friday.

Transactions had been slow in recent weeks because many importers were concerned that an imminent interest rate hike aimed at curbing inflation would trigger a downtrend in commodity prices, Chinese traders said.

But any downtrend resulting from the interest rate hike was likely to run its course within days, as the lower prices would lead buyers back to replenish stocks and the restocking activity would push prices higher, they added.

PE and PP might trade higher at the end of December when negotiations for January shipments begin, but the increment in PE prices might be limited if import costs stayed above the retail prices, the Chinese traders said. The import costs of most PE grades were currently above their retail prices, they said.

For example, imported linear low density PE (LLDPE) was selling below yuan (CNY) 11,000/tonne (US$1,653/tonne) EXWH (ex-warehouse) in the retail market, about CNY500/tonne lower than the average import costs of December cargoes, they said.


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