New year kicks off with opposite trends in China’s import, local PE markets

The uptrend in China’s import PE markets was sustained when the new year of 2024 kicked off, indicating the three-week rising track and persistent attempts to recoup margin losses by import suppliers. On the other hand, domestic prices experienced some downward adjustments since a lack of positive factors forced sellers to offer discounts on deals.

Firm costs lifted imports further; caution still around

As for the week ending on January 5, overall import PE prices were assessed $10-25/ton higher at $985-1040/ton for LDPE film, $10-20/ton higher at $920-990/ton for LLDPE film, and stable to $30/ton higher at $930-1020/ton for HDPE film, all on a CIF China, cash basis.

Data obtained from ChemOrbis Price Index suggest the prices of the three main PE film grades have reached their highest levels since mid-October 2023.





Firm upstream and ethylene costs, coupled with the precipitous rise in freight rates, continued to pave the way for import sellers to test the markets with higher levels.

A trader commented, “Production costs have again risen amid higher crude oil and upstream feedstocks,” while a converter also noted, “Producers reiterate that the hikes are mostly driven by higher costs and surging freights.”

The increases in import prices found some acceptance from buyers, according to a source at a South Korean producer, who raised their high-end offers to China by $20-30/ton. However, the cautious attitude toward the ongoing upside still prevailed among buyers, with a Xinjiang-based trader saying, “Import markets remain on a rising track, but market sentiment for chasing higher prices remains cautious.”

Falling futures, surging stocks clouded domestic scenarios

Market sentiment took a hit from a relentless downturn in futures prices, which kicked off on December 28, 2023. May LLDPE futures on the Dalian Commodity Exchange posted a cumulative loss of CNY207/ton ($29/ton) during the past six consecutive lower settlements, as of January 8.

Adding to the retreating futures markets were weak supply-demand dynamics, dampening spot PE prices. Overall demand stayed unpromising since downstream factories were not willing to purchase, and domestic traders also showed low buying enthusiasm, according to market sources.

Players expected domestic inventories to accumulate during the New Year holiday, but the actual figures significantly exceeded their expectations. When the market returned from the holiday on January 2, the two major Chinese producers’ combined polyolefin inventories dramatically surged by about 230,000 tons when compared to the final working day of 2023, according to market sources. At the time of writing, the level had increased further by 40,000 tons, to be reported at 720,000 tons on January 8.

Opposite opinions on demand recovery

Market participants have been divided on their expectations for demand recovery, especially in the run-up to the Lunar New Year holiday. Rumor has it that people will arrange to leave their working desks to celebrate the holiday earlier than in previous years, so some players expect the pre-holiday demand is likely to weaken further.

On the other side of the coin, upbeat players see a potential recovery across the PE markets and downstream sectors with the hope of some pass-throughs. Two traders said, “In the new year, demand might at last pick up, and signs of an actual rebound can be observed all the way from polymers to finished goods. Producers still have hope that converters will be able to pass along some of the hikes to their end consumers.”