China's PP, PE prices mostly stabilize after Dalian market turbulence

Import and local polyolefin prices in China have not seen any major changes so far this week as the sentiment has slightly improved amid the end of the sharp falls in futures. The PP and PE downfall was triggered by plunging futures in mid-October and lasted for a few weeks, ChemOrbis Price Index data reveal.

Futures plunge after DCE adjusts trading margins on Oct 13

The rally in PP and LLDPE futures ended when the Dalian Commodity Exchange (DCE) decided to adjust the margin level of speculative trading of PE, PP and PVC futures on October 13. Following the intervention, futures started to fall rapidly while the downfall lasted until around end-October.

From October 11 to October 28, LLDPE and PP futures plunged around 13-15%. This perfect storm of price decreases at the DCE led to a notable downturn in the country’s physical PP and PE markets.

Local LDPE, PP raffia prices were down 10-12% in 3 weeks

Data from ChemOrbis Price Index suggest that the weekly averages of LDPE film and homo-PP raffia prices on ex-warehouse China basis witnessed cumulative decreases of 10-12% during the three-week downtrend.

The LDPE market was at its highest since January 2014 right before it started to fall while PP raffia was standing at a three-year high.

LLDPE film was down around 6% while HDPE film posted a smaller decrease of 2% in the same period.

This week, prices have been mostly unchanged. “LLDPE and PP futures on the DCE are slightly fluctuating following the end of the sharp falls, which has supported the sentiment in the spot markets. Demand is not strong and supplies are rising, yet we don’t expect prices to decrease further in the near term,” explained a trader.

Another trader added, “Local prices are stabilizing following the sharp declines as the futures market is not falling anymore. Higher crude oil prices are also supporting the sentiment for polyolefins. However, we are not foreseeing a sharp upturn for PP or PE since supplies are likely to be ample. Buyers continue to limit their purchases.”

Meanwhile, import prices followed the locals and did not witness any major changes from last week, either. Offers for Middle Eastern origins were largely stable on the week at $1520-1550/ton for LDPE film, at $1150-1180/ton for LLDPE film, at $1140-1180/ton for HDPE film, and at $1190-1230/ton for homo-PP raffia, all on CIF China, cash basis.