A Chinese trader contacted by SSESSMENTS.COM highlighted factors that influenced the current pricing decision for July shipment PE, PP offers to the country. Within this week, July shipment offers for PE and PP cargoes mostly have emerged in the China market with upward adjustments. For Indian cargoes, a producer decided to increase the offers for HDPE Injection and PP Homo Injection by $30/ton and $60/ton, respectively, as compared to June. For these new offers, the Indian producer notified that the last shipping date would be around August. Due to this, buyers are unwilling to take the cargoes. From Taiwan, July shipment offers for HDPE Film and HDPE Yarn cargoes went up between $10-20/ton on a weekly comparison.
From the Middle East, the trader told SSESSMENTS.COM on receiving July shipment offers for Qatari HDPE Film, LDPE Film and LLDPE Film C4 at $30/ton higher than last week’s level. Meanwhile, no allocation for LDPE Heavy Duty cargoes of Qatar origin. Whereas from a South Korean producer, July shipment offers had increased by $70/ton for HDPE Yarn, $80/ton for LDPE Coating and $50/ton for LLDPE Film C4. All compared to June shipment offers. Additionally, the trader also received South African HDPE Yarn and LLDPE Film C4 offers, each at $900/ton and $775-780/ton on LC at sight, CIF China Main Port basis, no price comparison available.
Behind the uptrend in July shipment offers, the trader assumed that the current pricing strategy is associated with several factors. First, higher production costs following the high ethylene prices. Second, both local and foreign producers currently have lesser sales pressure on their shoulders owing to the low inventory level in the domestic market and picking-up demand outside China. Third, most foreign producers think that Chinese buyers’ acceptance-level is higher compared to other markets. Last but not least, the information about the delayed shipment of Iranian cargoes has been spread out in the market, hence, most suppliers utilize the moment to raise their offers, especially for LDPE Film, SSESSMENTS.COM was told.
Demand-wise, the trader reported to SSESSMENTS.COM that buying sentiment in the domestic market is rather weak. Some players said that the weak demand is caused by the impact of Coronavirus pandemic that still lingers in the market; which mainly haunts sales for finished products. As such, most converters are more cautious in taking cargoes as of recent. Likely, the sales for July shipment will not be too satisfying since converters are objecting to high prices. Afterwards, it may also lead to inventory pressure. In the upcoming month, demand for PE and PP are most likely still in low season, thus, the trader personally thinks that Golden September and Silver October will not be repeated this year.
