Bearish dynamics dominate China’s local PP, PE markets; LD drops from 2-year high

Increasing supply issues, falling futures prices, and subdued demand during the low season dominated China’s local PP and PE markets last week. Sellers offered discounts to boost sales, leading to price declines across all polyolefins, including LDPE film, despite high production costs.

LLDPE futures on the Dalian Commodity Exchange dropped by 2% over the week, while PP futures fell by about 1% as of July 12. Polyolefin players closely watched these declines, with buyers stepping back in anticipation of these trends impacting spot prices. “The focus has shifted to the futures market, which is currently exerting downward pressure on prices,” said a trader.

LDPE film down from highest since Aug 2022

As per data from ChemOrbis Price Index, the weekly average of local LDPE film prices in dollar terms declined from around two-year high last week. Prices had been rising since early April due to persistent supply tightness during the Q2 maintenance season and shipping issues.

“LDPE supply is still tight, but weak demand has overshadowed supply constraints, forcing sellers to lower prices,” noted a source from a local producer.

HDPE film hovers around 6-month low

According to players, HDPE has remained the weakest product among all film grades in terms of supply-demand and prices. The local HDPE film market has been softening since around mid-June, if a short-lived rebound in early July is disregarded.

Last week, the overall range for local prices was assessed CNY150-155/ton ($21/ton) lower, with the mid-point of the overall price range in dollar terms reaching the lowest level since January, according to ChemOrbis data.

“HDPE supply is ample due to several plant restarts in China and the Middle East, along with high market inventories from excessive early imports. Demand is currently at its worst for HDPE film due to the seasonal lull,” commented a trader.

LLDPE film also softens to 2-month low

Local LLDPE film prices were stable to CNY100/ton ($14/ton) lower last week. ChemOrbis Price Index data showed the market returning to mid-May levels.

“LLDPE availability remains limited, but some units are scheduled to restart soon, which will increase supply. The pace of destocking has significantly slowed given the low season,” commented a trader.

Homo-PP prices down for 4th straight week

Local homo-PP raffia and injection prices in China have been declining since mid-June, when they hit an eight-month high. Last week, prices decreased further by CNY50/ton ($7/ton), reaching a two-month low.

“The market is oversupplied due to several Mid-Eastern and Chinese plants resuming production after maintenance turnarounds,” explained a trader. Several players noted weak demand amid a seasonal lull.

“Adverse weather conditions, including high temperatures and flooding in regions such as Hunan, Jiangxi, and Anhui, have further dampened demand. Buyers are cautious, making only necessary purchases due to limited cash flow and a lack of market confidence,” added another trader.

A PP converter also noted, “Both PPH raffia and PPBC injection prices have edged lower due to growing supply and weak demand. The expected increase in customs duties on Chinese electric vehicles to Europe has exacerbated the demand slowdown.”