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China’s PE market remains weak despite turnaround season

  • 20/03/2017 (04:13)
China’s PE market has been dealing with oversupply issues since the end of the Chinese New Year holiday, with major domestic producers’ inventories reportedly standing above 1 million tons. This factor along with sluggish demand and softening upstream costs has been putting pressure on the market since players returned from the holiday.

Futures prices on the Dalian Commodity Exchange, meanwhile, are still lower compared to last month despite a cumulative gain of $42/ton posted during last week and this is also contributing to the persistent bearish sentiment in the country.

A few traders commented, “Sellers in China focus on re-exporting activities in hopes of achieving better netbacks in other markets. Local supplies are growing in the face of stagnant demand.”

On the other hand, China’s PE market is preparing for a turnaround season which is set to start in March. Several plants are planned to be shut for maintenance until the end of the second quarter. Although the start of the turnaround season is creating some rebound expectations on the sellers’ side, players mostly concur that the market remains indifferent to upcoming shutdowns since demand is not strong enough to digest the existing high stocks.

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