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China PP, PE markets on nearly 3-month losing streak amid scant demand

by Pınar Polat -
  • 09/06/2021 (03:15)
In China, import PP and PE prices have been on a steady downtrend since mid-March due to limited buying activity amid the off-season and Asia’s Covid battle.

The pressure from new PP and PE capacities coming on stream inside the country, as well as the weakness of Dalian futures, have also reinforced the bearish sentiment.

PP prices record 3-digit losses in total

The ChemOrbis Product Snapshot table below compares PP prices and price changes in China from mid-March to today, showing that Middle East origin homo-PP raffia/inj. and PPBC inj. offers have lost around 15-16% within this period.

PP Prices – Import – China

A trader commented, “PP prices have moved lower this week. Now is the off-season for the plastic woven and BOPP sector, keeping demand limited. Moreover, the electricity usage restrictions in the southern part of the country and the recent Covid outbreak in Guangdong have also halted buying activity. We think there is room for further PP losses over the near term with supply concerns amid new capacities adding to the bearishness.”

PE prices hit lowest levels in the past months

As can be seen in the chart obtained from ChemOrbis Price Wizard, the weekly averages of Middle East origin LLDPE and HDPE film prices CIF on China basis have recently hit their lowest levels since early February to stand at $1020/ton.

PE Prices – Import – China

Another trader said, “Overseas sellers have continued to reduce their PE offers to China. There is some improvement in the number of deals concluded as buyers are disposed to make HDPE and LLDPE film purchases from levels around $1000/ton CIF following the recent appreciation of yuan against the USD. However, overall buying activity is still limited due to the off-season. Plus, supply is expected to increase over the near term amid new capacities.”

Mid-East origin LDPE film offers break below $1200/ton CIF

While Middle East origin LDPE film prices have hit a seven-month low on average according to ChemOrbis data, offers at $1190/ton CIF have also been available for this origin recently. The last time offers below the $1200/ton CIF threshold were obtainable in the market was November 2020.

Within the nearly three-month downtrend, LDPE has witnessed relatively larger declines compared to other PE products, meanwhile.

Dalian futures defy strong energy markets

Despite a recent correction, crude oil prices were still high with WTI and Brent hovering around $69/barrel and $71/barrel respectively at the time of writing. However, the impact of oil’s strong performance on Dalian futures was restrained by the Chinese government’s intervention in commodity markets to curb “excessive speculation” and lower inflation risks.

September PP and LLDPE futures on the Dalian Commodity Exchange posted weekly losses of CNY275/ton ($43/ton) on June 8.
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