LLDPE, HDPE closely chase each other in China, LDPE’s premium grows

Regardless of some potential bearish factors, particularly weak supply-demand dynamics, China’s import PE prices continued to track an upturn last week, while domestic prices rebounded following a short downswing mainly due to positive cost pushes. The upward trend was further supported by a lack of offers from import sources and the strengthening of the yuan against the US dollar.

“Producers have found some support, albeit limited, to make their hike requests accepted, while underscoring that rising costs – mostly driven by the spike in freight rates - are the primary reason for the current upward adjustments. The Red Sea tensions are impacting freight rates and shipping duration, delaying the arrival of shipments to Asia,” said a converter, while a trader reported, “Import offers are relatively scarce, so PE prices have experienced some upward movement.”

In the meantime, recent events have caused the trajectory of PE markets to shift in a number of notable ways.

LLDPE, HDPE traded at par inside China

As for the week ending on January 12, domestic prices were assessed CNY30-100/ton ($4-14/ton) higher from the previous week for LLDPE film and CNY20-130/ton ($3-18/ton) higher for HDPE film, both at CNY8100-8320/ton ($1010-1038/ton without VAT), on an ex-warehouse, cash including VAT basis.

This illustrates the first time LLDPE and HDPE film have traded at par since early March 2023, according to data obtained from ChemOrbis Price Index.

A trader based in Dalian attributed the ongoing development to supply and demand conditions, saying, “Considering sluggish demand and rising supply for HDPE, the prices for this grade are similar to LLDPE prices.”

Delta between import LL, HD hit multi-month low

A similar pattern emerged in the import markets, where LLDPE film began to closely align with HDPE film. Various Indian and Middle Eastern sellers opted to make some upward adjustments of $10/ton at the low end of their LLDPE ranges, while HDPE prices were rolled over, leading to the same low end of $930/ton for both grades.

Last week, overall import PE prices were assessed stable to $10/ton higher at $930-990/ton for LLDPE film and stable at $930-1020/ton for HDPE film, both on a CIF China, cash basis. ChemOrbis data shows a gap of $15/ton between the two, indicating a nearly-six-month low.

LD gained premiums over the two grades

Meanwhile, LDPE film proved to be the strongest among the three main PE grades during the current firming, widening its premiums over LLDPE and HDPE film.

Considering sellers’ persistent hike attempts, the weekly average of import LDPE film prices rose by nearly 6% in the past month, while the other two grades saw smaller increases of 3-4%. In addition, any import offers under the $1000/ton threshold completely disappeared for LDPE.

Within the same period, domestic prices quoted in USD for LDPE film also carried the biggest premiums over LLDPE and HDPE film since late February 2023, when the prices of the two latter grades were mostly at par.

For a clear visualization of the PE trend, please refer to the graphs below.