A Xiamen-based trader shared with SSESSMENTS.COM on the downward adjustment on April shipment offers for Qatari PE cargoes to the country. As reported, April shipment offers for Qatari PE cargoes surfaced with a reduction of between $25-65/ton from March shipment level. The trader purchased HDPE Film and LDPE Film cargoes at the same level to the initial offers at $770/ton and $860/ton, respectively on LC at sight, CIF China Main Port basis. Likewise, the trader bought South Korean LLDPE Film C4 cargoes at the same level to the initial offer at $740/ton on LC 90 days, CIF China Main Port basis. In the local market, offers for HDPE Film and LLDPE Film C4 decreased by CNY50/ton ($7/ton) following the drop in the futures prices. While offers for local LDPE Film remain stable due to the relatively tight supply in the market. As for PP, local PP prices remain stable on the weekly comparison.
Demand-wise, the Coronavirus outbreak has slowed down the global economy. Hence, China, as the exporter of various products is affected. Some factories reported receiving cancellation emails from customers. Moreover, slow digestion rates for finished products demand has forced some auto manufacturers to close the factories due to high inventory level, SSESSMENTS.COM was told.
The trader opined to SSESSMENTS.COM that demand will not increase significantly when the market back to normal as people will be more cautious about spending. While profit margin from the oil-based producers still quite good as the low-cost materials which they bought when the cost of those oil-based materials declined could be sold with higher prices in April or May when the market is returning to normal. However, coal-based producers have to follow market movements and adjusted down prices despite the stable coal prices. Hence, the trader opined that coal-based producers will have to cut operating rates or shut plants to prevent oversupply.
