Bearish sentiment returns in China PP and PE markets

In China, PP and PE markets returned from a week-long National Day holiday in early October on firm footing but weakened only within a few days. The sentiment has stayed bearish since then as pressure from limited demand along with weaker Dalian futures prices has continued.

Demand falls short of expectations despite high season

The Golden September Silver October season continues but buying activity has mostly remained limited, traders comment. “Agricultural sector is in the peak season. Demand is not doing bad but still is mostly buy-on-need basis only. The packaging sector is not too good,” said a trader.

Another factor that has weighed further on the buying sentiment is the signals given by the government regarding the country would maintain its zero-Covid strategy at the 20th Party Congress that took place in Beijing on October 16.

“The outcome of the recent congress is affecting the market sentiment as China will continue to adopt the zero-covid policy. We think demand can be challenging due to the policy,” another trader commented.

Meanwhile, local supply levels have moved higher compared to late September, when they were standing below 600,000 tons. But still, they are considered at moderate levels, not putting sellers under too much sales pressure.

According to market sources, the two major local producers’ combined polyolefin inventories in China are standing at 760,000 tons as of October 19.

Dalian futures follow crude oil prices down

January PP and LLDPE futures prices on the Dalian Commodity Exchange posted weekly losses of CNY349/ton ($48/ton) and CNY360/ton ($50/ton) on the week as of October 19. Lower crude oil prices and slow demand have weighed on futures prices.

Local prices move lower, imports mostly unchanged

Local homo PP raffia and injection prices were assessed at CNY8200-8300/ton ex-warehouse China, cash including VAT ($975-1000/ton without VAT). The weekly range has indicated CNY200-300/ton ($28-42/ton) decreases from last week so far.

PE prices were assessed at CNY9495-9815/ton ($1176-1216/ton without VAT) for LDPE film, at CNY8200-8530/ton ($1012-1053/ton without VAT) for LLDPE film, and CNY8290-8450/ton ($1027-1049/ton without VAT) for HDPE film, on similar terms. The weekly ranges have indicated CNY90-585/ton ($12-81/ton) decreases from last week so far.

As for imports, Middle East-origin LDPE film prices are standing at $1090-1130/ton CIF China, cash while LLDPE and HDPE film prices are at $960-980/ton and $950-970/ton with similar terms.

Middle East-origin homo-PP raffia and injection prices are standing at $930-940/ton CIF China, cash basis.