Buyer resistance counterbalances cost pressure in China’s PE markets
As a result, the price assessments for the week ending on September 8 were made stable from the previous week at $970-1040/ton for LDPE film, at $950-1020/ton for HDPE film, and at $920-1000/ton for LLDPE film, all on CIF China, cash basis. ChemOrbis Price Index data reveal that the weekly averages of the price ranges point to a five-month high for LDPE and more than a four-month high for HDPE and LLDPE.
Sentiment still firm, but buyers shy away from high-end offers
The prevailing sentiment in China’s PE markets has remained supported by several factors, including the peak buying season in September and October, a modestly improved economy, and, needless to say, the significant cost pressure.
Being supported by the rally in crude oil, the spot ethylene price still held on to its three-and-a-half-month high of $830/ton CFR China, according to ChemOrbis Price Wizard. The cost factor, combined with a gradual resurgence in buying interest during the peak season, encouraged suppliers to maintain their pricing stance. Nevertheless, demand was not robust enough to lead to any price increases last week, as buyers remained resistant to elevated price levels.
A trader noted, “While downstream factories are experiencing a seasonal increase in demand, the challenge of low orders for end-products persists. Additionally, buyers remain hesitant when it comes to purchasing high-priced materials.”
Depreciation of yuan puts extra pressure on import purchases
The Chinese Yuan has reached its lowest value in 16 years, primarily due to concerns regarding the country’s economic rebound. Despite China’s central bank (PBOC) setting a daily reference rate at a stronger-than-expected level on September 7, the local currency depreciated by approximately 0.2%, reaching 7.3294 per American dollar.
“The recent depreciation of the Chinese currency has raised the costs of imports and driven away import buyers,” another trader said.
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