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China’s HDPE market returns firm from holidays, defying LDPE, LLDPE

by ChemOrbis Editorial Team - content@chemorbis.com
  • 10/10/2017 (16:47)
Following the end of the one-week National Day holidays, PE players in China started to return to their desks this week in the midst of volatile futures markets as well as softer spot ethylene prices.

On the Dalian Commodity Exchange, January LLDPE futures closed CNY40/ton ($6/ton) higher on Monday, October 9, yet they were down by CNY60/ton ($9/ton) on Tuesday, October 10, failing to provide an indication regarding the direction of the market for players.

Spot ethylene prices in Northeast Asia, meanwhile, shifted direction two weeks ago after tracking an increasing trend for almost three months. Spot prices were at their seven-month high before the downturn started by late September.

Beside these, crude oil futures failed to extend their pre-holiday upturn into October by moving back below the $50/barrel threshold last week.

Under these circumstances, some PE traders in China failed to make a firm start to the post-holiday period contrary to their earlier expectations. Accordingly, initial LDPE and LLDPE prices from both local and import traders emerged on a stable to slightly softer path after the holiday.

Despite delayed shipments from Iran coupled with the post-Harvey tightness in the US, players reported that overall supply levels of Sinopec and CNPC were more than sufficient for LDPE and LLDPE as their stocks increased during the pre-holiday period due to the lack of demand.

HDPE prices, on the other hand, opened the post-holiday period with increases on the back of limited supplies and relatively better demand given the imminent start of the preparations for Christmas and the Chinese New Year festival. Plus, the agricultural season continues to boost demand for HDPE products.

So far this week, import PE prices to China were reported at $1210-1270/ton for HDPE film, at $1230-1295/ton for LDPE film and at $1180-1265/ton for LLDPE film, all on CIF, cash basis. When compared to the pre-holiday week, these ranges show decreases of around $10-35/ton for LDPE and LLDPE film while the HDPE range is stable on the high end and up $50/ton on the low end.

A bag manufacturer in China noted, “Most converters have resumed their operations as of this week and buyers are sourcing materials. However, traders’ HDPE supplies are quite tight. For this reason, HDPE prices are still firm while LDPE and LLDPE prices are slightly softening due to sufficient supplies. Traders and end-users are particularly looking for HDPE pipe while film and blow moulding inventories are also low.”

The buyer received HDPE blow moulding offers for an Iranian origin at $1230-1240/ton CIF, cash, which are found to be as high as LDPE film prices as initial post-holiday offers for Iranian LDPE film emerged at $1230-1250/ton with the same terms.

A Ningbo-based trader commented, “We expect PE demand to be healthy in the last quarter of the year due to the preparations for Christmas, the year-end as well as the Chinese New Year celebrations. The ban on the imports of scrap plastics will also help the PE sentiment improve by the end of the year. However, the government’s ongoing environmental inspections are likely to force more manufacturers to shut their factories in the upcoming months, which may limit demand from end-users.”
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