This week we have seen the release of the monthly supply figures covering the period up to the 10th August. These figures showed that during the last month, 105k of supply had been added taking the annual total supply to 613k. When compared against annual demand (1,010k) this would indicate that the supply is in balance with demand but prices have continued to hold firm in the face of concerns exporting material to China.
As has been the case this year, these concerns on future supply have continued to take the lead in pricing decisions rather than the facts the market has to hand. Some buyers are continuing to support the current price while others have stepped back concerned that prices have become overheated. The prices and trading in Plastic shows that the PRN system works, with higher prices protecting supply. The difference this year is that we have yet to see the undersupply confirmed with current prices being created by buyers closing positions in the belief that supply will tighten as the year progresses.
- Ian Andrews