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China PE markets cautiously rebound after 5-month downtrend

by Pınar Polat - ppolat@chemorbis.com
  • 15/09/2022 (09:57)
In China, import PE prices have slightly firmed up after the end of the Mid-Autumn Festival while local prices have extended their gains into the second week. This followed a downtrend that permeated the markets since April.

The cautious improvement in the market sentiment is mainly attributed to a pick-up in demand amid the high season, although the sustainability is mooted.

Mid-East origin LDPE, LLDPE offers up $10-20 on week

The early week reports have shown that LDPE film and LLDPE film prices of the Middle East origins currently stand at $1060-1100/ton and $950-960/ton on CIF, cash basis, respectively. The ranges have indicated $10-20/ton increases from last week so far.

HDPE film prices of the Middle East origins, meanwhile, are stable to $10/ton higher at $930-960/ton with similar terms.

PE – Import – China

PE gains inside China more visible

Local PE ranges have gained total gains of up to CNY135-525/ton ($19-76/ton) in the past two weeks.

Prices are quoted at CNY8965-9900/ton ($1140-1259/ton without VAT) for LDPE film, at CNY7955-8200/ton ($1012-1043/ton without VAT) for LLDPE film, and at CNY7880-8400/ton ($1002-1068/ton without VAT) for HDPE film, all on ex-warehouse China, cash including VAT basis.

Stocks after mid-Autumn Festival

Stock levels fell to around or slightly below 700,000 tons starting from July, which is a critical threshold suggesting that stocks are not high enough inside, and have hovered around these levels since then. This is because local producers have reduced operating rates to minimize margin losses. Adding to this is the recent demand recovery.

The stock levels were very much the same this week, although there was an accumulation of stocks due to the mid-Autumn Festival stretching from September 10 to 12. The two major local producers’ combined polyolefin levels were standing at 695,000 tons as of September 14.

Price hikes already meet with resistance

As there have been some price hikes, the resistance on the buyers’ side has also been immediately seen.

A trader commented, “This week, there are limited offers in the market. Traders are replenishing as import markets stabilized last week after a long-term downtrend. Typhoon Hinnamnor temporarily shut Shanghai’s major container port of Yangshan last week and some delays occurred in the delivery and shipments. However, the number of the done deal is getting limited following the price hikes and also the drop in crude oil prices. Still, there is some improvement on the demand side after the holidays.”

As part of the government’s commitment to the “zero-case” policy, the ongoing pandemic-related restrictions including full or partial lockdowns and massive tests continue to affect at least 30 regions across the country. This remains a major pressure on the demand front. However, players expect some positivity around the Communist party’s 20th National Congress on October 16, which may help reduce policy uncertainty and refocus on economic development.
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