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China HDPE market’s premium over LLDPE hits highest in a year

by Merve Sezgün -
  • 09/07/2020 (04:04)
PE prices in China extended their gains into the eighth consecutive week, already having come back to the levels seen before the downturn kicked off in early February due to the severe impacts of the COVID-19 pandemic. During the uptrend, HDPE film has seen larger gains than LDPE and LLDPE given some particular reasons.

“Limited supplies and higher futures have kept the uptrend intact this week. HDPE offers are still more bullish than other PE products,” players said.

Data from ChemOrbis Price Index suggest that the weekly averages of LDPE and LLDPE film prices on CIF China basis have climbed 15% since the upturn started off eight weeks ago, while HDPE film has posted a larger gain of 22% over the same period.

Robust demand for HDPE pipe supports the film grade

Demand towards HDPE pipe has been strong in China since the country came out of its COVID-19 related lockdowns amid increased activity in the infrastructure and construction sectors.

According to players, rising prices of HDPE pipe have also supported the broader sentiment for other HDPE products, helping the film grade increase at a faster pace than LLDPE film in Asia.

Offers for Middle Eastern HDPE film have appeared at/above the $900/ton CIF China threshold this week for the first time since October 2019.

Mid-Eastern HDPE film trades $75/ton above LLDPE

In China, import HDPE film prices for Middle Eastern origins are currently trading $75/ton above LLDPE film, the highest premium since July 2019, as ChemOrbis Price Wizard shows. In around mid-May, the price gap between the two products was only $13/ton.

The weekly average of Middle Eastern HDPE film offers has recently hit a nine-month high while LLDPE prices for the same origin are currently at their highest level since only mid-February.

Low supplies keep overall sentiment firm

Players noted that both local and import PE supplies were limited due to planned or unplanned plant shutdowns inside China or abroad. Delayed arrival of Iranian cargos has added to low availability.

The two major domestic producers’ overall polyolefin supplies were reported at 675,000 tons on July 8, down 60,000 tons from Monday.

Regarding the Iranian shipment issue, a trader commented, “Several buyers in China are yet to receive their orders for Iranian HDPE, and now they have to buy to cover their urgent needs regardless of the price level. Supplies from major Southeast Asian producers are also limited due to their ongoing shutdowns. We are hearing that some sellers offer Southeast Asian HDPE film at as high as $1000/ton CIF China.”
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