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Will China’s PE market sustain its upward momentum?

  • 07/01/2016 (03:14)
Players in China report that PE sellers have opened the new year with price increase attempts, arguing that prices should be near the bottom given the prolonged downward trend and firm spot ethylene costs. Buyers remain skeptical, however, countering that 2016 is likely to see another year of slower than expected consumption growth while adding that ongoing additions of new coal based PE plants will keep supply levels sufficient to cover demand.

“Prices are up around $20/ton for import cargoes and around CNY100-200/ton ($15-31/ton) for domestic materials. We attribute these hikes to the fact that Sinopec and CNPC are said to be holding low stock levels. Although most sellers are firm on their prices for now, we have not seen any major up-tick in trading activity and we believe that demand will drop off towards the end of the month as players begin to leave their desks for the Chinese New Year holidays,” a trader reported.

Another trader added, “Import prices have risen by around $10-20/ton and most sellers are standing firm on their prices for now. Demand is better when compared with the previous week as some buyers are beginning to stock up ahead of the holidays, although most deals continue to be done for small quantities.”

A distributor offering to the domestic market commented, “Local prices are up around CNY100-200/ton ($15-31/ton) as CNPC and Sinopec claim to be feeling free from inventory pressure. However, we are not seeing any major change in converters’ buying activity and we feel that more attractive prices will become available later in the month once some players begin to step away from the market for the holidays.”

Another distributor stated, “Prices have seen significant increases in the first week of the year, but buyers continue to purchase only in small volumes to cover their needs. There may be some restocking activity in the next week or so as many players are holding low stocks, although trading activity will drop off once again in the second half of the month as players will begin to leave their desks for the Chinese New Year holidays.”
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