China import PE prices corrected down on weaker-than-expected demand recovery

In China, import PE markets have witnessed some downward corrections by the middle of March after fluctuating within a small range since the end of the Lunar New Year holidays that corresponded to late January.

Tighter overseas supply from the Middle East amid a series of shutdowns in the region has been the key pillar of the firm sentiment of PE market since early January, with the recent contribution of a recovery in demand driven by the high season of the agricultural sector.

However, there has been a downward correction this week as demand recovery has been weaker than expected. Lower local PE prices due to increased supply at home and oil-driven losses in Dalian futures prices have also put pressure on the import markets.

HDPE film sees relatively smaller decreases

During the week that ended on March 17, Middle East origin PE offers were assessed $20-40/ton lower from the previous week’s levels at $1030-1090/ton for LDPE film, and $20-30/ton lower at $970-1010/ton for LLDPE film, all on CIF China, cash basis.

As for HDPE film, spot prices of the same origin have been stable to $10/ton lower at $980-1020/ton, due to relatively tighter supply, traders reported.



Domestic dynamics add to demand conditions

A few traders commented, “Prices have been under a slight correction recently. The markets have not firmed up as much as expected as firm demand expectations have not materialized. There has also been downward pressure from lower local PE prices amid higher supply levels at home and weaker Dalian futures prices.”

May LLDPE futures prices posted a weekly loss of CNY186 ($27/ton) on the week as of March 17. The losses in Dalian futures prices were mostly attributed to the sharp fall in crude oil prices.

Elaborating further, they also added, “Demand for the packaging sector is stable while agricultural-related products are improving amid the peak season. Supply at home has increased due to the restart of several plants from turnarounds and fewer shutdowns. We expect the near-term market trend to be stable to slightly lower.”

Local PE prices were on a downward trend for the past two weeks, ChemOrbis Price Index shows.

Supply concerns become prominent

Growing supply woes in China amid new capacities is also another factor that keeps sentiment under pressure. In 2023, more than 7 million tons of new PE capacity is slated to come onstream globally, with 3.4 million or more than 48% of them coming from China, the latest data from ChemOrbis Production News Pro show.

“The market outlook turns negative as there is pressure from new start-ups while demand recovery seems unlikely to catch up with supply growth,” a player noted.