China’s post-CNY PE markets propped up by costs, yet weak fundamentals weigh on sentiment

In China, the local PE markets started the post-holiday week on a stable to slightly firmer trend, while imports remained stable despite tight supply from Middle Eastern suppliers.

Local prices were slightly up in the current week due to higher production costs. However, sellers couldn’t pass these increases on to buyers as most of them had made some stock replenishment to cover their needs for the post-holiday period. Plus, most converters have not resumed their operations this week, and they are expected to return to the markets by next week. These situations, coupled with accumulated domestic inventories, weighed on sentiment.

Local prices in China were assessed stable to CNY90/ton ($13/ton) higher when compared to the pre-holiday week at CNY8950-9300/ton ($1109-1152/ton without VAT) for LDPE film and stable to CNY25/ton ($3/ton) higher at CNY8000-8375/ton ($991-1038/ton without VAT) for LLDPE and CNY8000-8535/ton ($990-1054/ton without VAT) for HDPE film, all on an ex-warehouse, cash including VAT basis.

As for imports, despite the ongoing tightness of Mid-Eastern allocations, prices have failed to increase in the face of sluggish demand and ample local supplies.

Import PE prices were assessed stable from their pre-holiday levels at $1020-1070/ton for LDPE film, $950-1020/ton for HDPE film, and $920-990/ton for LLDPE film, all on a CIF China, cash basis. Within the ranges, Middle Eastern offers stood at $1020-1060/ton for LDPE film, $950-980/ton for HDPE film, and $930-980/ton for LLDPE film.

“Buyers are still cautious and make requirement-based purchases only. We are expecting small replenishment activities next week,” opined a market player. The player also pointed to the relatively few offers in the import markets.

A semi-finished product buyer pointed out that downstream markets needed some time to ramp up and commented, “We hope that demand recovery in downstream markets will boost prices of polymers into Q2, 2024.”

“Due to the ongoing pressure from petrochemical inventories, local suppliers may offer some discounts to clear stocks. Currently, markets face several bearish factors, including slow demand towards end-products, and low purchasing enthusiasm. Thus, there is still an expectation of downward pressure on prices,” said a polymer trader.