Hikes return to China’s PE markets on rising demand

The PE markets in China faced downward pressure last week due to falling futures and crude oil prices. However, a steady recovery in demand, spurred by the high season and upcoming holidays, has lifted market sentiment, prompting renewed price hikes from both overseas and local sellers.

Import LD breaks above $1200 mark, locals see higher low end

South Korean LDPE film offers were raised by up to $40/ton, pushing the high end of the price range above $1200/ton CIF for the first time in eight weeks. Middle Eastern suppliers also implemented fresh hikes of $10-20/ton for LDPE film. Meanwhile, import LLDPE and HDPE offers have seen rollovers or slight gains of $10/ton.

A source from a South Korean producer said, “We raised our PE offers this week in response to better demand conditions for all grades. Uptake volumes have increased as buyers are restocking their inventories with additional cargoes.”

Despite the ongoing downtrend in Dalian futures prices, driven by weaker oil prices, the trading atmosphere in the spot PE markets has turned more positive compared to last week. Players reported higher levels at the low end of domestic ranges, with increases of CNY50-90/ton ($7-13/ton).

Rising demand becomes game changer

Stronger demand has primarily allowed PE sellers to attempt price hikes. With the onset of the “Golden September – Silver October” season, buying enthusiasm from several downstream PE sectors is improving, and more factories are entering the market to stockpile.

“Requirements for agriculture film are robust, while packaging demand from the retail, food, and pharmaceutical industries emerges. Purchasing power also shows signs of revival in the automotive industry,” a converter commented.

Moreover, the upcoming Mid-Autumn Festival, set for early next week, has boosted buying appetite for PE as food packaging applications see higher demand. A trader noted, “The peak season is driving improved demand. With the Mid-Autumn Festival approaching, restocking activities by packaging factories are strong, lifting trading sentiment.”

High supply, futures downtrend still cause concerns

Players reported the rising import availability has still had little impact on PE markets. However, more domestic plants have resumed operations, leading to increasing run rates and higher supply for PE at home. A trader based in Zhejiang opined, “Supply pressure becomes more pronounced, as many plants restart after previous turnarounds.”

As of September 11, the combined polyolefin inventories of the two major domestic producers reached 800,000 tons, indicating a weekly increase of 50,000 tons, according to market sources.

Adding to ample supply are the ongoing downturn in Dalian futures markets and additional decreases in oil prices. These downbeat factors potentially reduce cost support and dampen market sentiment. Indeed, spot ethylene prices saw the first drop of $10/ton after more than two months, standing at $870/ton as of September 9.