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China’s PP and PE markets shrug off Dalian surge, close July on a bearish note

by Pınar Polat - ppolat@chemorbis.com
  • 28/07/2022 (10:22)
In China, sluggish demand caused by the uncertainty over the pandemic has kept China’s PP and PE prices on a relentless bearish note since April. Overseas suppliers’ increased availability to China at competitive levels has also challenged the markets recently, extending the slump into late July despite the steady rise in Dalian futures prices.

As of July 27, Wednesday, September PP and LLDPE futures on the Dalian Commodity Exchange have settled higher for the third consecutive session, posting total gains of CNY84/ton ($13/ton) and CNY109/ton ($16/ton), respectively. Firmer futures prices are mainly attributed to the higher crude oil prices.

PPH raffia and injection offers at/above $1000 CIF mark fade

After homo PP raffia and injection offers below the $1000/ton CIF threshold appeared in the market over the past week, additional weekly losses of $20-40/ton have been reported so far this week, with the overall range standing at $950-980/ton CIF, cash.

A trader commented, “The slowdown in China’s construction and property sectors, Covid-19 concerns, and global inflation are all taking a toll on demand. Currently, PP demand from both domestic and export markets is weak. We expect to see a recovery in August ahead of the coming peak season.”

Local homo PP raffia and injection prices have also been down by CNY100/ton ($15/ton) from last week to stand at CNY8,000-8,100/ton ex-warehouse China, cash including VAT ($1047-1060/ton without VAT).

PE offers test new lows

Import LDPE film falls to the lowest level since June 2021

Import LDPE film offers below the $1200/ton threshold have also appeared this week and ChemOrbis data show that June 2021 was the last time offers at these levels were reported. Offers of this grade have relatively witnessed larger decreases than LLDPE and HDPE film during some parts of the decreasing period.

LDPE film prices of Indian origin currently stand at $1190-1200/ton on CIF, cash basis while the ones of the Middle East and Iran origin stand at $1210-1240/ton with similar terms. These ranges have indicated $20-30/ton decreases from last week so far.

Import HDPE, LLDPE film hover at/around $1000/ton CIF

Import LLDPE film offers below the $1000/ton threshold were reported this week. Indian origin offers are currently standing at $970-980/ton on CIF, cash basis while the ones of Middle East origin are standing at $990-1010/ton with similar terms. These ranges have indicated $50-60/ton decreases from last week so far.

As for HDPE film offers, import prices for the Middle East origin have fallen by $30-40/ton from last week to touch the $1000/ton CIF threshold on the low end.

Local PE prices also significantly down

“Cost support is strong due to firmer crude and Dalian futures prices. However, demand from both export and domestic markets is weak. Although supply pressure for imports mounts, the supply levels at home are moderate now. However, new Covid-19 outbreaks, global economic woes, and extreme temperatures are all affecting demand,” another trader noted.

According to market sources, the two major local producers’ combined polyolefin levels were standing at 635,000 tons as of July 27.

Local PE prices have been assessed at CNY9,900-10,250/ton ($1295-1341/ton without VAT) for LDPE film, at CNY7,900-8,300/ton ($1034-1086/ton without VAT) for LLDPE film, and CNY8,280-8,700/ton ($1083-1138/ton without VAT) for HDPE film, all on ex-warehouse China, cash including VAT basis. The weekly ranges have posted weekly losses within the range of CNY100-550/ton ($15-81/ton) so far this week.
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