Dec 23 China PP Producer Inventory Shed to a Medium Level
1. China Total PP Inventory Shed
According to SCI, China’s PP inventory on December 23, 2022 shed 2.59% from December 16. Therein, the PP inventory at major PP producers declined, while that at sample trading enterprises and sample ports all headed down.
Remarks: Total PP inventory involves PP inventory at major producers, PP inventory at sample ports and PP inventory at sample trading companies.
2. China PP Inventory at Major Producers Fell
On December 23, 2022, PP inventory at major producers registered a decrease of 4.4% W-O-W. PP inventory at major producers grew at first but then shed. PP output rose by 2.55% W-O-W, and operating rates edged up due to less maintenance. The overall downstream demand for PP was insipid, especially for PP fiber. Deals were mediocre with hand-to-mouth procurement of downstream users. Near the end of this month, PP producers kept inventories comfortable given the end-month settlement. PP inventory at major producers stands at a medium level at present.
3. China PP Inventory at Sample Ports Rallied
On December 23, 2022, PP inventory at China’s main ports rose by 4.58% W-O-W amid the dearth of workers and demand weakness. Limited imports arrived in China. The import arbitrage window stayed open because China-origin PP prices remained higher than imported ones, while their spread shrank with fluctuations in exchange rates. Overseas producers curtailed the number of their offers for PP. Downstream enterprises whittled down operating rates amid slack sales, and they also represented poor initiatives in stocking up. Besides, the transport of goods was hindered by the dearth of workers, propelling the accumulation of PP port inventory.
4. China PP Inventory at Sample Traders Increased
On December 23, 2022, PP inventory at sample traders rose by 5.39% W-O-W amid soft dealings. The futures prices gained ground but then declined near the weekend, and spot PP prices also lost ground. Market sentiment got hampered. Meanwhile, downstream plants kept operating rates lower compared with the same period of last year because of scarce orders and squeezed profits, so their purchase demand for PP was lackluster. Therefore, traders saw rising inventory this week.
5. Summary
The PP futures went public on February 28, 2014, and since then, the financial property of the spot products became stronger. The quantifiable data about supply-demand fundamentals played a more important role in judging the PP market trend. The data of production and import were transparent and hysteretic. Hence, the data were hard to become the main factor to forecast the market trend. Concerning raw materials inventory, it was difficult to collect its data, let alone collect it timely. Thus, inventory data became an irreplaceable and prominent factor to analyze the future market situation.
PP output is estimated to grow slowly amid intensive maintenance this week, but PP demand may stay lackluster. More downstream users suspended production or curtailed operating rates, and they showed thin interest in stockpiling, which will result in tepid deals. Generally, SCI predicts that PP inventory will mount up slightly this week.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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