PE sentiment shows sign of improvement, PP still fragile in China

China’s polyolefin markets have largely stabilized amid a tug of war between poor supply-demand fundamentals and some positive catalysts stemming from rising Dalian futures and the government’s macroeconomic policies. Early this week, there was a slight improvement in sentiment for PE, while PP faced continued demand pressure.

As for the week ending on December 15, ChemOrbis Price Index data reveals that PE film prices on a CIF China basis hovered around 4-month lows for LDPE and 5-month lows for HDPE and LLDPE. The import prices of PPBC inj. and homo-PP raffia and inj. stood at the lowest levels since late July-early August.

Prices for both products were assessed stable from the previous week at $940-1010/ton for LDPE film, $910-980/ton for HDPE film, $880-960/ton for LLDPE film, and at $850-920/ton for homo-PP raffia and injection, all on CIF China, cash basis. Inside China, the domestic PP and PE markets were also stable last week, meanwhile.


As of early this week, market participants reported some slight rebounds in PE markets, while the PP sentiment remained weaker in the face of the persistent weakness of demand.

Positive factors prop up PE sentiment

As per the latest updates from market sources, PE prices continue to trend sideways this week, while some rebounds have also been observed in the light of a slight upturn in futures prices and positive macroeconomic news.

LLDPE futures prices on the Dalian Commodity Exchange have been on the rise since December 6, if the two lower settlements on December 13 and 14 are disregarded, having posted a cumulative increase of CNY319/ton ($45/ton) since the uptrend kicked off on December 6, encouraging sentiment in the PE spot markets.

On the economic front, last Friday witnessed China’s central bank, the People’s Bank of China (PBOC), offering commercial lenders a net 800 billion yuan ($112 billion) of one-year loans, which was considered the largest injection of medium-term policy loans ever. Meanwhile, China’s industrial output increased by 6.6% in November year-on-year, surpassing expectations.

Weak demand still obstacles PP movement

On the flip side, PP markets have still sunk into weakness, trailing behind PE. A trader said, “The supply-demand situation has still reflected headwinds in the polyolefin markets. However, there is still some support considering the stabilization and rebound of energy prices. PP appears relatively weaker compared to other petrochemical products.”

Meanwhile, a converter last week reported lingering sluggish demand for PP due to a lack of downstream purchases. He noted, “PP demand has stagnated for several months, resulting in the absence of buying by converters. We have been facing rising inventories as downstream demand for finished products has been weaker.”