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China PE market continues to see downward corrections amid impending holiday

by Pınar Polat -
  • 30/09/2020 (09:01)
In China, import PE prices have posted slight decreases for the second consecutive week in the face of increasing supply levels and tapering demand amid the imminent start of the week-long National Day Holiday in early October.

“Import PE prices have continued to see a healthy downward correction ahead of the lengthy national holiday. In terms of supply, the tightness has eased off in line with the continuing arrival of import cargoes, particularly for Iran origins. The demand side is also unpromising. Despite the high season for polyolefins in the September-October period, buyers are limiting their purchases,” a trader commented.

According to the ChemOrbis Price Index, the weekly averages of LLDPE and HDPE film prices on CIF China basis have retreated around 3% since mid-September to currently stand at $917/ton and $930/ton respectively.

LDPE film sees relatively larger losses

The weekly average of LDPE prices on CIF China basis has lost 4.3% in the past two weeks to stand at $1110/ton recently, ChemOrbis data also show.

The trader also said, “LDPE sees relatively larger decreases than other PE grades considering the sharper increases in the previous weeks.”

Prior to this, prices gained 22.5% from the first half of August to mid-September, reaching their highest levels since August 2018 with support from tightness and increased demand for food packaging due to social controls amid the pandemic.

Saudi major hikes Oct PE offers but confirms recent softening

A major Saudi producer hiked its October PE offers by $60/ton for LLDPE and LDPE film while applying a smaller increase of $10/ton for HDPE film during the final days of September.

Although the recent offer levels indicated increases on a month over month basis, the agent of the major producer confirmed the recent downward correction in import PE prices.

“Demand is not strong. Replenishment activity prior to the week-long national holiday in early October has been completed,” the agent noted.

Local PE prices remain under pressure from weaker Dalian futures

Local PE prices have also extended their slight losses into the final days of September, retreating by CNY50-100/ton ($7-15/ton) so far this week.

The ongoing softening was attributed to slower demand and the weaker Dalian futures. January LLDPE futures on the Dalian Commodity Exchange posted a weekly decrease of CNY75/ton ($11/ton) as of September 29.

Meanwhile, traders reported that China’s two major local producers’ combined polyolefin inventory stood at 610,000 tons on September 28, referred to as healthy levels.

Post-holiday expectations voiced

How China PE market will return from the holiday is a factor to watch for PE players at home and the ones operating across major global markets.

Chinese players have been underlining the impact of two factors and voicing that the post-holiday trend will depend on them; the state of demand and levels of supply.

Moreover, concerns regarding the new PE capacities inside China have remained as they are not only to put added pressure on local supply but also likely to ease the country’s dependency on imports.
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