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Import PE tightness eases off in China; LDPE stabilizes at two-and-a-half-year high

by Merve Sezgün -
  • 05/11/2020 (04:08)
China’s PE demand has tapered off following several weeks of active buying, while players report that import availability has seen a relief on the heels of the fully discharged Iranian cargoes combined with gradually improving supplies from the US.

“The high demand season stretching from September to October is over. Supplies are increasing, and additionally spot ethylene prices are moving lower. A combination of these factors are weighing on PE sentiment,” they noted.

A few other factors putting players in a cautious mood were cited as a fresh wave of COVID-19 cases in overseas countries, volatile crude oil futures and the US elections.

HDPE, LLDPE slightly down; LDPE stable on week

Data from ChemOrbis Price Index reveal that the weekly average of import LDPE prices for overall origins has stabilized at $1195/ton CIF, the highest level since May 2018. Suppliers are preserving their LDPE offers at high levels as this product is still relatively stronger than other PE grades.

The weekly averages of HDPE and LLDPE film prices on CIF China, cash basis have seen weekly decreases of around $5-10/ton to be quoted at $965/ton and $940/ton, respectively.
This has been the second consecutive week that they track a softer trend.

Price relief mostly attributed to improving supply levels

One of the main reasons pushing import PE prices higher was the tight availability particularly for LDPE. Amid Iranian shipments issue and US force majeures, prices saw consecutive increases for weeks.

According to traders, all Iranian cargoes have already been discharged successfully at Chinese ports, which helped import supply levels improve in the country.

As for supply disruptions from the US amid the hurricane-driven force majeures, players reported that US producers were gradually going back to normality. According to some market sources, recovering supply levels have already weighed down on export LLDPE and HDPE offers from the country.

Spot ethylene down 16% on month

Meanwhile, two South Korean producers who reduced their LLDPE and HDPE film offers to China by $10/ton from last week pointed out that lower feedstock costs also hurt buying appetite.

According to ChemOrbis Price Wizard data, spot ethylene prices on CFR China basis have declined 16% or $135/ton from a month earlier to be recently quoted at $735/ton, the lowest level since around mid-August.
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