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LDPE, LLDPE demand improves in China

by ChemOrbis Editorial Team -
  • 02/09/2016 (17:17)
Players reported that tightness in LDPE and LLDPE supply persists in China while demand is showing signs of recovery. LLDPE has been tight for some time while LDPE supplies have diminished as well recently. Reduced LDPE allocation from Qatar as well as a shutdown at one of the main LDPE producers in Iran who usually exports to China were cited as the reasons for the LDPE tightness.

A trader also attributed the ongoing local tightness for LLDPE to the maintenance shutdown at Sinopec Sabic Tianjin Petrochemical’s 600,000 tons/year plant between Aug 11 and Sept 25. Apart from that, delivery problems stemming from the recent road ban due to the G20 Summit have also contributed to the current supply concerns.

In terms of demand, some players report it is improving and the sentiment is better due to increasing buying frequency for the agricultural season. “The sentiment is better now. Although buyers maintain their needs-only-purchasing, they buy more often these days,” said a trader.

Players voice different opinions about the impact of these factors on prices. On the one hand, some argue that the market will remain on a firm note. “There is no reason for PE prices to decline in September. Demand is improving while supplies are tight. After the end of the G20 Summit, there will not be an oversupply as easing supplies will counterbalance the existing tightness,” said a trader in Shanghai.

On the other hand, a second trader said, “Demand should pick up in line with the season. However, the recent upturn is mostly driven by supply issues rather than demand. Therefore, higher demand may not necessarily be followed by further price increases.”

Another trader commented, “PE prices have followed a stable to firm path for some time. We think that prices might soften in the near term. Iran’s return to the market and the approaching end of maintenance season by late September will ease tightness, which would eventually put downward pressure on PE prices.”
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