LDPE run-up enters its third month in China as tightness persists
Lately, there has been an uptick in demand ahead of China’s National Day holiday on 1-7 October, also called the Golden Week. This has also contributed to the weekly price gains.
During the week that ended on September 10, import LDPE prices on CIF China basis were assessed $10/ton higher at $1390-1430/ton while local prices were assessed CNY100-300/ton ($16-47/ton) higher at CNY11060-11600/ton ($1515-1589/ton without VAT), on ex-warehouse China, cash including VAT basis. Import prices have seen another round of modest hikes so far this week, meanwhile.
According to ChemOrbis Price Index data, the weekly average of import LDPE film prices has witnessed a cumulative gain of $230/ton or 19% since the uptrend kicked off in mid-June.
Tightness comes to the fore when it comes to LDPE pricing
Import LDPE supply has been persistently short, particularly from the Middle East.
The supply situation for LDPE has been no different inside China. While there are maintenance shutdowns at several plants, LDPE is the grade that is the least affected by the oversupply concerns.
HDPE and LLDPE remain under pressure from some 1.3 to 1.4 million tons of additional capacity.
“LDPE has remained the strongest product among all PE grades with support from tightness while HDPE has still been the weakest. LLDPE has been getting along with healthy demand from food packaging applications amid the pandemic conditions. We think that players in the downstream markets will replenish material ahead of the long holiday in October,” said a trader based in Xinjiang.
Suspended operations at some China ports support outlook
Ranking among the world’s busiest ports, Shanghai Port and Ningbo-Zhoushan Port have reportedly suspended some operations as Typhoon Chanthu diverted its way to East Asia.
The disruption came at a time when Covid-19 resurgence worsened a container backlog at the Chinese ports.
“With the Typhoon Chanthu arriving into China, the suspended operations at Shanghai and Ningbo ports are likely to lead to further price hikes due to possible delays in shipments,” the trader added.
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