Bearishness persists across China, SEA import PE markets as year-end nears

In China and Southeast Asia, import PE markets have been on a month-long downtrend, weighed down by sluggish demand that overshadowed supportive costs. While some buyers showed lukewarm interest in early Lunar New Year preparations, a seasonal lull continued to dampen PE market sentiment in China. Meanwhile, Southeast Asian converters have halted restocking, opting to maintain cash flow ahead of the year-end.

Alongside a lack of demand, an influx of competitive offers for US materials amid the traditional destocking period of the year has intensified competition in regional import PE markets. Lower-priced offers from other origins, coupled with weak December pricing from a major Saudi Arabian producer, added further pressure on PE prices.

The major Saudi Arabian producer announced rollovers to renewed drops to some regional markets. As for China, the producer reduced LDPE and HDPE offers by $10/ton compared to November, while LLDPE offers remained unchanged. Their December offers to Vietnam witnessed decreases of $30-50/ton for all three main PE film grades.

LDPE prices hit multi-month lows

As for the week ending on December 6, import LDPE film prices for all origins were assessed stable to $20/ton lower at $1080-1210/ton on CIF China, cash basis. In Southeast Asia, the import range for this grade was also stable to $20/ton lower week-on-week, being assessed at $1140-1210/ton CIF, cash. According to ChemOrbis Price Index weekly averages, LDPE prices in China hit a three-month low, while Southeast Asia’s prices were at their lowest level since mid-May.

“Pre-holiday procurement may lead to more orders in downstream sectors like food packaging and daily chemicals, but demand for greenhouse film has dropped due to the off-season. Consequently, agricultural film producers are reducing their purchases of PE grades, while overall downstream production remains relatively unchanged,” said a Chinese trader.

HDPE takes biggest hit from low US offers

The flow of low-priced US cargoes, a common trend during the year-end, has continued to exert bearish pressure across global PE markets. A source noted, “US suppliers are offering aggressively low prices to clear inventories before the new year, significantly undercutting previous levels.”

In both China and Southeast Asia, competitive US offers pulled the low end of the import HDPE film price range down by $30/ton and $40/ton, respectively. Vietnam’s import HDPE film market hit the $900 mark for the first time in over two years. ChemOrbis data suggests the weekly midpoint of China’s HDPE film prices hit a two-year low, while Southeast Asia’s prices fell to their lowest levels since late August 2020.

Weak demand for HDPE film further exacerbated the price decline, with this grade considered the weakest performer among PE film types. “HDPE prices have dropped significantly compared to other grades as demand is notably weak. Prices remain under pressure and may decrease further before year-end, especially for HD grades,” said a trader in Vietnam.

LL stabilizes in China, slides further in SEA

The seasonal slowdown in China’s agricultural sector has impacted demand for LLDPE film, often used in agricultural and tunnel applications. However, LLDPE prices managed to hold steady, supported by a lack of oversupply concerns. A Zhejiang-based trader noted, “LLDPE is not facing significant supply pressure, which helps maintain stable prices and raises expectations for a firmer outlook.”

In contrast, Southeast Asia saw the prices for this grade sliding in the second straight week given lukewarm buying enthusiasm and attractive offers from the Middle East, which widely appeared across the region’s major markets.

A regional representative of a major Middle Eastern producer opined, “Demand remains weak, not only because of less uptake of end products, but also because of year-end festivities like Christmas, New Year, and the upcoming Chinese New Year. Buyers lack sufficient time to replenish or deplete inventories, so we do not foresee a significant recovery in demand in the near term.”