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Spot prices have softened for almost all polymer products in China in the final week before the country’s National Day holidays as new banking restrictions inside the country coupled with fears of renewed recession in Western economies have driven most buyers to the sidelines. In spite of the significant declines that most polymer prices have posted for September, most players are predicting further softening in the coming month as there are few encouraging signs that would point to a revival in demand. Most sellers report that they were disappointed with their September sales as the expected high seasons in sectors such as agricultural film failed to materialize while the hoped-for pick up in demand from Muslim countries after the Ramadan holidays in late August also proved elusive.

China’s homo-PP and LLDPE film markets have been among the hardest hit over the past few weeks by a combination of slower demand, weaker upstream costs and widespread economic concerns. Import homo-PP injection and raffia prices have posted cumulative decreases of $40-90/ton from the start of the month while import LLDPE film prices have lost $60-80/ton when compared with the first week of September. PVC prices have also been strongly affected as October import offers for Asian origins are currently beinggin offered $70-115/ton below the September done deal level after producers agreed to consecutive reductions on their October prices in the face of lackluster demand.

Many converters in the country say that they have scaled back their operations as demand for their end products has weakened in line with renewed concerns about the health of the global economy. End product orders for the Christmas season from both Europe and the US have been disappointing as major Western economies continue to struggle with lackluster economic growth and high levels of government debt.

Inside China, monetary policy is set to continue to tighten for the remainder of the year as the government looks to bring inflation under control. China’s inflation rate has exceeded the government’s full year target of 4% every month so far this year. Consumer price inflation stood at 6.2% in August, which was down from the intra-year of 6.5% recorded in July but still well above the government’s target level. Traders in and around Ningbo, one of the country’s major economic hubs, report that local banks are adopting increasingly stringent criteria for the granting of letters of credit. Traders say that banks are now only granting letters of credit with deferred payment terms with clients with established business backgrounds, leaving many small traders and distributors without ready access to credit.

 
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