China’s LDPE film market continues to buck softening trend in HDPE and LLDPE

As availability problems have continued, China’s LDPE film prices have risen further after reaching their almost two-year highs in the middle of the month. On the other hand, the HDPE film market saw its downturn entering the third week, while sellers issued fresh downward revisions on their LLDPE film offers during the week ending on June 28.

In China’s PE markets, supply continues to be the dominant factor influencing prices. The scarcity of LDPE film has persisted, prompting sellers to seek even higher price increases, while the abundance of HDPE and LLDPE has continued to put supply pressure on the markets. On top of that, the off-season has still dampened downstream factories’ buying interest, since end demand has slowed down, and operating rates have been reduced.

Major Saudi producer hikes LD, cuts HD

A major Saudi Arabian producer announced July offers with a mixed bag. LDPE film offers from the producer witnessed a notable hike of $70/ton from June, at $1200/ton CIF China, cash. However, HDPE film prices dropped by $10/ton to $990/ton, and LLDPE film remained flat at $1000/ton with the same terms.
An agent of the producer said, “Although the supply is abundant for HDPE and LLDPE, it is hard to deliver cargoes due to the congestion at ports and limited container spaces. Thus, importing these grades is still more costly than buying from local sources. LDPE supply, on the other hand, remains tight.”

She added, “Overall demand is weak, yet HDPE demand is the weakest due to the low season in China. Downstream buyers are not willing to replenish at current prices, feeling uncertain about the outlook.”

Deltas between LD & HD at around 2-year high

In the past three weeks, data obtained from ChemOrbis Price Index suggest that import LDPE film price increased by roughly 6%, whereas its local prices saw a bigger gain of over 7%, both on a weekly average. The weekly average prices of local and import HDPE film, on the other hand, declined by around 1-3% over the same period.

The opposite direction of the two grades continuously widened the gaps between them, which currently stand at around two-year highs of $165/ton for imports and $282/ton for local prices, according to ChemOrbis data.

Meanwhile, the difference between import HDPE and LLDPE offers contracted to the lowest level since March 2023. Inside the country, LLDPE film has mostly traded above HDPE since early May, with the current premium that the former carries over the latter standing at $19/ton.


LLDPE prices edge down after 3-month uptrend

Following a long uptrend kicked off in March, LLDPE prices experienced some slight downward adjustments over the week ending on June 28, since weak the imbalance between supply and demand came to the fore.

Import LLDPE film prices for all origins were assessed stable to $10/ton lower at $950-1080/ton on a CIF, cash basis. In the meantime, the domestic prices were stable to CNY35/ton ($5/ton) lower weekly, to be assessed at CNY8500-8795/ton ($1036-1072/ton without VAT) on ex-warehouse China, cash including VAT basis.

Will LDPE sustain its firmness?

LDPE prices have room to sustain their firm footing in the upcoming week since tight supply and escalating freight rates are likely to keep supporting sellers. However, a lack of demand and buyers’ resistance to high levels may cast a shadow over the outlook for all PE grades in general, and LDPE film in particular. Over a longer term, supply is expected to increase since the heavy turnaround season in the Middle East, Asia, and China itself is coming to an end, gradually easing LDPE’s current tightness.

A trader noted, “The domestic and regional supply will lengthen due to the nearing end of the maintenance season. Buyers anticipate that with an increasing number of Middle Eastern and Asian polymer plants resuming operations after the turnarounds, ample supply in July will lead to more decreases.”