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China PP Short-term Supply and Demand Imbalance Driven Export Volume Increased

With the continuous release of new domestic production capacity, PP gradually higher degree of localization. According to ICIS An Xunsi data show that by the end of 2016, domestic PP production rose to 19912,000 tons, up 13%; the other hand, China’s economic downward pressure significantly, 2016 domestic PP actual demand is about 23.75 million tons, year on year Up 8%. The self-sufficiency rate (yield / table demand) rose to 82%, and this trend continues. Therefore, in the short term domestic PP supply pressure to be released under the requirements of the PP export volume is small, but the arbitrage opportunities appear for the seller, is also excellent.

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According to China’s customs data show that PP exports from January to April this year, up to 117,000 tons, up 36%; which, in April Vietnam is the largest export destination, accounting for 36% of total exports; followed by Thailand, Indonesia And Malaysia.

At present, Vietnam has only one 150,000 tons annual production capacity of PP manufacturers. Although the local capacity of new plans, but the fastest set of 400,000 tons per year PP plant is expected to put into operation in the first half of 2018. Therefore, the short-term supply temporarily failed to follow up the rapid development of the local plastics processing industry, the demand to rely on imported sources to fill the demand gap.

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Benefit from China – ASEAN Free Trade Agreement, China PP exports to Vietnam to enjoy zero tariff. And China to Vietnam from the distance, the sea freight is relatively low; coupled with ample supply of China, Vietnam, lack of demand, so both hit it off. From the monthly export volume and export arbitrage space comparison chart can clearly feel that when the arbitrage space is higher than 50 US dollars / ton, China’s exports to Vietnam, the number of PP increased significantly. When the arbitrage window is narrowed or closed, the export volume is significantly reduced.

In addition, Chinese export of PP supplies are mostly poly-wire material, target customers for the plastic film, film processing industry(PP Film Washing Line). Although this year, Chinese exports to Thailand and Indonesia, the number of PP has increased; However, as part of Chinese export sources are coal PP supply, the Thai buyers still have doubts about its quality, to be further observed. While China to Indonesia’s PP products are still tariffs, the market competition is more intense. Therefore, in the local new production capacity before production is expected to short-term Vietnam will continue to be Chinese largest exporter of PP.

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