PE price correction continues in China; HDPE more prone to drops than others
According to the weekly average data obtained from ChemOrbis Price Index, Middle East origin LDPE and LLDPE film prices on CIF China basis have lost $15/ton and $20/ton in the past two weeks at $1400/ton and $1010/ton respectively.
As for Middle East origin HDPE film, prices have posted larger decreases of $40/ton within the same period to stand at $995/ton with similar terms.
Demand traditionally slows down amid year-end
Chinese players have been reporting slower market activity in recent weeks due to the approaching year-end festivities.
A trader commented, “Downstream demand has remained muted this week, with buyers mostly purchasing on a need basis. Major producers have also cut their offer levels to attract deals and to reduce their inventory levels. Spot prices are also lower due to the weakness in futures prices.”
May LLDPE futures on the Dalian Commodity Exchange posted a total decrease of CNY275/ton ($42/ton) during trading sessions on December 21-22.
HDPE film sees larger losses than other grades
The pace of decreases in HDPE film prices has been faster than other film grades. Market players have also underlined this point by citing that supply for HDPE film is more ample compared to other grades.
Affirming this, ChemOrbis data also show that HDPE film prices on CIF China basis moved below LLDPE film prices over the past week for the first time since late March. Nowadays, the gap between these two products with Middle East origin is standing at $15/ton.
Another trader opined, “On the supply side, HDPE is ample. We think that supply pressure for HDPE will remain in place over the near term as the arrival of US cargoes in January and February is still expected. As for demand, the Chinese yuan has recently depreciated against the US dollar prompting sellers to reduce their import offers. This has added to the weak buying sentiment.”
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