LDPE film keeps outperforming HDPE, LLDPE across China, SE Asia

LDPE film has begun to expand its deltas with HDPE and LLDPE film throughout Asia since January. The ongoing turnaround season in the region and the Middle East, accompanied by a rally in ocean freight rates, has continuously boosted PE prices, particularly for LDPE film. The current deltas are therefore at their highest points since late 2022.

Saudi major issued hefty hikes for LDPE

A major Saudi Arabian producer raised their June PE offers to China, with LDPE film seeing a hefty increase of $60/ton on a monthly comparison. Meanwhile, offers for LLDPE and HDPE film rose by $50/ton and $20-30/ton, respectively.

An agent of the producer noted, “Our allocations remain below usual levels. Import prices in China have been on the rise amid positive macroeconomic factors, increasing costs, and surging freight rates.”

Players participating in Vietnam’s PE markets also reported a surge in the major producer’s June offers to the country. LDPE film prices witnessed three-digit gains of more than $100/ton, whereas LLDPE and HDPE film were quoted $20-30/ton higher when compared to May.

China: LD’s premium over HD at more than 1-year high

During the week ending on May 31, import prices for all origins were assessed $20-30/ton higher from the previous week at $1080-1150/ton for LDPE film, stable to $20/ton higher at $970-1080/ton for HDPE film, and $10-30/ton higher at $960-1050/ton for LLDPE film, all on a CIF, cash basis.

Following the latest increases, the premium that LDPE carries over HDPE expanded to a more than 1-year high of $90/ton, according to the weekly average data retrieved from ChemOrbis Price Index. The data also reveal that the former has traded over $100/ton above LLDPE film for five successive weeks.

A comparable pattern has also emerged inside the country. The differences between the domestic prices of LDPE film and the other two main PE film grades reached their highest levels since November 2022, ChemOrbis data showed.

SEA: Gap between LD and HD widens by nearly 40% within 2 weeks

In mid-May, Southeast Asia saw LDPE film’s premium over HDPE climbing back above $100/ton after one and a half years. Two weeks later, the premium sharply increased by roughly 40%, at $160/ton, while the gap between LDPE film and LLDPE was standing at its nearly two-year high of $185/ton.

As a side note, import PE film prices for all origins over the week ending on May 31 were assessed stable from the previous week at $1180-1280/ton for LDPE film, $1040-1100/ton for HDPE film, and $1020-1070/ton for LLDPE film, all on CIF SEA, cash basis.

Supply tightness has final say, defying weak demand

The supply tightness persisted amid the turnaround season, sustaining high prices for PE raw materials, not to mention elevating shipping costs. Notably, the lack of LDPE lines when compared to HDPE and LLDPE further contributed to its shortage of supply. A trader commented, “HDPE and LLDPE supply is sufficient, whereas LDPE availability remains tight, leading to larger increases for this grade.”

Fruitful margins were also attributed to the LDPE film’s outstanding strength, meanwhile. “LDPE film prices from the Middle East have risen sharply due to bullish freight rates and low supply. Better netbacks also encourage suppliers to sell their LDPE film to other countries,” said another trader based in Xiamen.

However, demand woes have still lingered on the back of the off-season, dimming the market outlook, while buyers have shown resistance to high-priced cargoes. “Demand for end products is unpromising, so buyers are reluctant to accept high prices. Some manage to find lower sources or buy locally to meet immediate requirements,” an agent of a Middle East producer said.