China’s PE markets on soft note amid weaker demand, falling futures

While China’s PP markets edged up thanks to a slight improvement in market fundamentals, PE prices remained under pressure amid sluggish demand and declining futures during the week ending on January 10. PE sellers managed to hold on to their import offers but offered some discounts to local buyers, leading to further weakness in the domestic market.

Local prices saw rollovers to decreases of CNY30-150 ($4-21/ton) when compared to the previous week, while import prices remained largely unchanged.

Demand stagnancy exerts sales pressure

Sluggish demand mainly pressured sellers, with many of them opting for lower offers to entice sales. The onset of the offseason continued to dampen buying interest and partially affected pre-holiday demand, which seemed to be met already. Buyers showed a lack of enthusiasm during price inquiries, with concluded deals being sporadic.

The approaching Spring Festival, starting in late January and extending until mid-February, signaled a further decline in demand from downstream sectors. Some businesses were reportedly preparing to halt activities for the holiday from mid-January.

A trader based in Zhejiang said, “As downstream factories gradually announce holiday schedules, sellers are likely to continue lowering prices for pre-sales to ease future sales pressure. Slight downward revisions in the market are expected in the near term.”

Weakening futures dampen sentiment

Additional pressure came from the bearish trend in the Dalian futures markets. A trader noted, “Futures prices have sharply trended downward, while demand remains weak, heightening sellers’ concerns and leading to more discounts.” Before ticking up by CNY38/ton ($5/ton) on January 10, May LLDPE futures on the Dalian Commodity Exchange had seen a cumulative decrease of CNY299/ton ($41/ton) over the previous five settlements.

Despite higher oil futures prices, a recent reversal in ethylene feedstock costs, following a lengthy upturn, also dimmed sellers’ confidence to a certain degree. ChemOrbis Price Wizard reveals that spot ethylene price slid by $10/ton on a weekly basis to $880/ton CFR China, indicating the first decrease since mid-October 2024.

Controllable supply provides some relief

On the positive side, reduced inventories and fewer import offers somewhat mitigated bearish factors. “With the Spring Festival nearing, the anticipated decline in demand has driven sellers to accelerate sales. Consequently, inventory pressure remains manageable, and the drop in spot prices has been relatively moderate,” added the Zhejiang-based trader.

According to market sources, the combined polyolefin inventories of China’s two major producers decreased by about 15,000 tons from the previous week, standing at 560,000 tons as of January 10.