China’s PE market continues bearish run on sluggish demand
Lack of demand results in lower import PE offers
A source from a South Korean producer reported that they applied additional decreases of $30/ton on their June HDPE offers to China this week.
A trader also cut his Saudi PE offers to China further this week and noted, “PE prices have remained on downtrend mainly due to frail demand amid falling orders. Buyers prefer to maintain their wait-and see stance as they are concerned about the impact of the trade tensions.”
Weaker Yuan hampers import demand
The depreciation of the Chinese yuan against the US dollar has also continued to hamper demand for import cargoes. Buyers have been shying away from the market in order to avoid parity risks.
Local PE prices no different than imports
The local PE market has also extended its losses into this week due to the ongoing stagnancy of demand and ample local polyolefin supplies.
Supply pressure remains in place
Local polyolefin supplies have been ample ever since the end of the Chinese New Year holiday that corresponds to mid- February.
A trader in China noted, “Two major local producers’ total polyolefin inventories are standing at around 920,000 tons as of early this week.”
Firmer LLDPE futures fail to pull PE prices up
LLDPE futures on the Dalian Commodity Exchange have followed a stable to firmer trend since early this week in response to the recent gains in crude oil futures.
However, local PE prices have been unresponsive to the firming in LLDPE futures so far as the market has remained under downward pressure from weak supply-demand dynamics.
Upstream ethylene adds extra pressure on PE
The weakness in spot ethylene market in Asia has also added further pressure on China’s PE market, players concur.
Three consecutive weeks of decreases have pushed spot ethylene prices on CFR Far East Asia basis to their lowest levels not seen since September 2015, according to the weekly average data obtained from ChemOrbis Price Wizard.
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