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HDPE film drops faster than other two main PE film grades in China

by Thi Huong Nguyen -
  • 21/11/2023 (02:06)
After taking a short breather, China’s PE markets returned to their downtrend last week. The markets continued to be pulled down given unpromising supply-demand fundamentals, especially for HDPE film, which witnessed larger drops when compared to LDPE and LLDPE film.
Derivative sectors struggled to increase operating rates, pressured by waning end demand and falling prices of finished goods. The lethargic buying interest, combined with a flow of HDPE import offers finding their way to China, clouded the picture for the grade.

Low end of Mid-East HDPE range at par with US origin

As of the week ending on November 17, overall import prices of HDPE film were assessed stable to $30/ton lower at $910-1000/ton on a CIF China, cash basis. Unlike the other two grades, which saw offers for main origins being mostly stable, main origin-based ranges of HDPE film posted renewed losses of $10-30/ton, at $910-970/ton for both Middle Eastern and Iranian materials.

The latest round of price cuts dragged the low end of the Middle Eastern range in line with offers for US materials. Under normal market circumstances, the price for Middle Eastern cargoes traditionally stands above those from the US.

Resurgent discount against LDPE inside China

In the domestic market, while the PE prices were assessed stable from the previous week for LDPE film and LLDPE film, the prices for HDPE film declined by CNY100-250/ton ($14-34/ton) as of the week ending on November 17.

During the ongoing downtrend across PE markets, there has been a tiny delta between LDPE film and HDPE film, with the latter trading marginally above the former in the previous two weeks, according to ChemOrbis data. Last week’s decreases in HDPE film, however, prompted LDPE film to regain a premium of $22/ton over the grade.


Rising number of offers fuels weakness; demand woes persist

The fact that other overseas markets have experienced a significant decline in demand considering the global economic slowdown encouraged import suppliers to target China as a destination to increase their HDPE sales volume, according to market players. The rising number of new offers in the subdued market gave suppliers no other choice but to visibly cut HDPE prices.

In the meantime, the overall weakness in demand has yet to indicate any meaningful improvement, as downstream manufacturing activity has remained in the doldrums. Buyers have still approached the market with a cautious wait-and-see attitude, leading to a slow pace of destocking and keeping worries over sluggish demand intact.

“The main industries of electronics, automotive, and construction are seeing an erosion in core demand, which prevents converters from raising their output,” said a converter. Meanwhile, a trader commented, “Some downstream factories are facing limited new orders, and most of them maintain limited procurements for basic requirements.”
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