China's polypropylene (PP) exports extended their fall in July, down by 28pc from June to 68,200t and slumping from a peak of 266,860t in April. But August shipments are likely to rebound with the arbitrage reopening to south Asia. China's exports remained at high levels in March, April, and May. The price gap between Chinese and overseas markets narrowed sharply in May, which caused a drop in exports in June and July. Prices in southeast Asia and south Asia fell on weaker demand caused by the impact of Covid-19 lockdowns in July. The surge in freight rates across east China ports also eroded export opportunities. But more shipments have headed to India, Bangladesh and Pakistan with south Asian demand recovering slightly China exported 60,000t of homopolymer-grade PP and 8,200t of co-polymers in July, according to China customs data. Exports were near double that of a year earlier despite the fall in July.
Exports are expected to increase in August as the arbitrage reopened slightly in mid-July following emerging buying interest from south Asia. PP raffia deals were done at $1,175-1,180/t on a fob basis, destined for south Asia and South America. A major Chinese supplier was offering $1,175/t fob to India. Freight rates from China to India have surged to $200-230/t compared with $170-180/t two weeks ago. The shutdown at the Meishan terminal at Ningbo-Zhoushan port two weeks earlier caused congestion at east China ports and lifted freight rates. Chinese producers were also monitoring bulk trade after container freight rates rose to unacceptable levels.But bulk trade often has issues such as unsteady shipments, longer deliveries and delayed bills of lading.