China’s local PVC, PP prices respond to falling futures; PE mostly unfazed

As a knee-jerk reaction to declining Dalian futures markets, spot prices of PVC and PP offers have fallen significantly in China. However, PE markets have largely remained unaffected, thanks to comparatively stronger supply-demand dynamics.

Futures market posts significant losses

Due to the prior bearish trend in crude oil and the diminishing impact of economic policies, PP, LLDPE, and PVC futures on the Dalian Commodity Exchange experienced a string of declines before rebounding slightly in the past two days. This led to noticeable weekly losses in weekly levels of futures, especially for PVC.

During the past week, the January settlements on the Dalian Commodity Exchange recorded notable drops, with a total of CNY284/ton ($40/ton) for PVC, while PP and LLDPE futures showed smaller decreases of CNY71/ton ($10/ton) and $87/ton ($12/ton), respectively. A trader said, “Domestic markets are under downward pressure with renewed price cuts due to falling futures.”

Reflection on local PVC, PP prices

Lower futures prices have dampened sellers’ confidence, leading to domestic PVC and PP prices dropping by CNY50-200/ton ($7-28/ton) compared to the previous week.

Local PVC prices are standing at CNY5300-5700/ton ($661-710/ton without VAT) for ethylene-based K67 and CNY5200-5400/ton ($648-673/ton without VAT) for acetylene-based K67, both on an ex-warehouse, cash, including VAT basis. The ranges for local PP prices are CNY7450-7650/ton ($928-953/ton without VAT) for homo-PP raffia and inj. and CNY7600-7950/ton ($946-990/ton without VAT) for PPBC inj., both on the same terms.

Apart from futures’ bearishness, unhealthy buying appetite and abundant supply also contributed to weaker performance in domestic PVC and PP markets. The ongoing supply glut in PVC, coupled with sluggish demand from the struggling real estate sector, has weighed heavily on trading activity.

Meanwhile, a PP trader commented, “Despite the government’s monetary policies, their positive impact on PP markets has been limited. Downstream buying interest remains lackluster due to weak end-user orders, leaving room for negotiation.”

LD stays on firm note, HD edges lower

On the other hand, LDPE film continued to outshine other polymer grades, with players reporting additional hikes despite the downswings in futures. Indeed, the low end of local LDPE film’s price range saw an increase of CNY175/ton ($25/ton).

LDPE has been supported by a shortage of supply due to China’s low capacities, while the peak season has driven demand for PE in sectors such as agriculture, retail, food, and pharmaceuticals. “The upcoming e-commerce festivals around Double 11 have boosted demand for food and logistics-related packaging,” noted a converter.

Meanwhile, HDPE film slightly edged down by CNY30/ton ($4/ton) on the low end of its range, while LLDPE film mainly stabilized at the time of writing.