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China’s import PE market moves above SE Asia

by ChemOrbis Editorial Team -
  • 14/11/2016 (03:25)
China’s import PE market maintained its firm trend during the past week to record further gains, supported by bullish factors such as the ongoing tightness, particularly for LDPE, and surging futures markets. On the other hand, in Southeast Asia, the upward PE trend slowed down a bit given buyers’ increasing resistance fed by their slow end product businesses as well as a bearish ethylene outlook.

As a result of its persistently strong outlook, China’s import PE market has moved above the levels in Southeast Asia since the end of the National Day holiday. According to data from ChemOrbis Price Index, CFR China based LDPE film prices on a weekly average basis are currently traded with a premium of $81/ton over CIF SEA based offers. This is the largest premium recorded in the last six years.

Source: ChemOrbis Price Wizard

PE sellers in China commented that trading activities were still buoyant during the past week while re-exported Middle Eastern PE materials from Vietnam continued to be reported. However, the fact that the Chinese PE market visibly moved above Southeast Asia cast doubt on the sustainability of the current high levels.

A Chinese trader opined, “Most buyers find the current levels to be too high and started to show resistance to offers close to the high ends. Hence, sellers focus on depleting their stocks given the possibility of a downward correction in prices.”

A converter also noted, “It is now time for China’s PE market to step back from its current high levels which are even above the Southeast Asian market. Although the tightness prevails, we believe that import PE prices have no room for further increases in the near term since it’s not healthy.”

ChemOrbis Price Index data shows that import LLDPE and HDPE film prices on a CFR China basis are also carrying a premium of around $22-32/ton over the Southeast Asian markets.

Source: ChemOrbis Price Wizard

Source: ChemOrbis Price Wizard

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