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C2 overshadows hike attempts in China’s local PE market

Oct. 18, 2018

In China, major domestic producers intended to increase their PE offers at the start of the week due to higher futures and lower-than-expected post-holiday supplies. However, decreasing spot ethylene prices coupled with unsupportive demand cast a shadow on sellers’ hike attempts.


The overall ranges for local PE prices witnessed increases of CNY100-200/ton ($14-28/ton) when compared to the pre-holiday week. “Two major domestic producers’ overall polyolefin supplies currently stand at around 860,000 tons, up by 1450,000 tons when compared to the pre-holiday week. We were expecting to see a higher increase in supplies,” a trader noted. The market also received support from strong LLDPE futures, which recorded a cumulative increase of CNY470/ton ($68/ton) on Monday and Tuesday. However, futures decreased a total of CNY260/ton ($38/ton) in the following two days, weighing on the sentiment. Meanwhile, spot ethylene prices on CFR Northeast Asia basis hit their lowest level since August 2017.


In the import market, overall prices stood at $1250-1300/ton for HDPE film, at $1110-1170/ton for LDPE film and at $1110-1130/ton for LLDPE film, all on CIF China, cash basis. The ranges were mostly stable to slightly lower from pre-holiday levels. Data from ChemOrbis Price Index suggest that, the weekly average of spot ethylene prices on CFR NEA basis has moved below the import HDPE film market after around 14 weeks while spot prices remained slightly above import LDPE and LLDPE film offers.


A major Saudi producer revealed its October prices to China with $10-20/ton drops for HDPE and LDPE. The producer applied rollovers or $10/ton hikes on its LLDPE film offers. An agent of the producer said, “Demand for HDPE is limited as buyers are showing resistance to the current offer levels. LLDPE is receiving support from the agricultural sector.”


PE players believe that HDPE prices still have room for further drops over the short term, considering buyers’ ongoing resistance to the prevailing offer levels. “The price gap between HDPE film and other PE products will soon close,” a trader opined. Meanwhile, the LLDPE film market is likely to receive support from supply concerns and gradually improving demand given the agricultural season.

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