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WeeklySSESSMENTS: China PE Prices Week Starting June 29

Author: SSESSMENTS

China PE Market Faces Another Headwind Amid Seasonal Slowdown, Virus Resurgence 

  • Concern over the second wave of pandemic and seasonal slowdown hit the market
  • Supply shortage, firmer energy markets determine import and local price movement
  • Delays on shipment PE cargoes from India and Iran

Chinese market players shared with SSESSMENTS.COM that China PE market is facing another headwind amid seasonal slowdown and an alarming resurgence of coronavirus outbreak nationwide. Over the week, China’s domestic and import PE prices remain on an upward trajectory amid supply disruptions from Iran, a key PE supplier to China, coupled with a relentless rally in the energy market. In the domestic market, supply disruptions from the US-sanctioned country and firmer feedstocks prices have sent local PE prices soaring. As compared to last week’s level, a trader opted to raise offers for local and localized HDPE Film of Taiwan origin by CNY100/ton ($14/ton). Similarly, another trader also initiated a price increase for local cargoes by CNY100-200/ton ($14-28/ton) for HDPE Blow Moulding and CNY200-250/ton ($28-35/ton) for LDPE Film as compared to the same period. From the import market, a South Korean producer announced higher offers for HDPE Film in comparison to the offer level available two weeks ago. As compared to fortnight ago, current producer’s offers are available at $50/ton higher. As the offers are deemed sky-high, some customers in China are reluctant to take the cargoes. In contrast, the leading Saudi polyolefins producer decided to roll over offers for HDPE Film, HDPE Blow Moulding, LDPE Film, and LLDPE Film C4 from a week earlier. As for Southeast Asia origin, a Thai PE producer has sold out its limited allocation for LLDPE Film C4 to China, the deals were concluded at the initial offer level, at $870/ton on LC at sight, CIF Main Port basis. Some sources pointed out that buyers were turning to the domestic market to source the materials, considering current import offers as unattractive. 

China's PE market continues to face strong headwinds as it battles the second wave of coronavirus infections in the Capital city, Beijing, coupled with the seasonal slowdown in domestic demand. Traditionally, downstream demand for PE is entering a seasonal lull in July, with most buyers purchasing on an as-needed only, unwilling to build inventories. As seasonal slowdown hits the market, most downstream factories are lowering their operation rate to match current demand conditions. On the other hand, some manufacturers curtailed their operations and cut back on employee travel amid pandemic crisis. Some big-scale converters stopped selling end-products temporarily as overall China consumption has not yet to show signs of a rebound; instead, these companies are reselling their abundant stocks of PE resins. Supply in the China PE market remains tight this week, on the back of a slew of turnarounds scheduled at local PE plants, delays on the shipment of PE cargoes from the key supplier. Further added, shipment for PE cargoes from an Indian producer has also been delayed due to the reduced vessel availability as the coronavirus lockdown hit the shipping sector. As of Thursday, July 2, SSESSMENTS.COM was informed that the inventory level of the two leading Chinese polyolefins producers captured at 670,000 tons, posting a significant reduction of 45,000 tons from Wednesday's level.

For the near-term outlook, market participants in China voiced out to SSESSMENTS.COM that there would be no room for PE prices to move lower, considering tight availability of spot domestic cargoes and firmer monomer price, albeit most buyers show a stiff resistance towards the high prices.

Local/localized PE offers on cash, EXW China basis (including 13% VAT in CNY term, excluding VAT in USD term)

OriginProductTransaction TypeOffers (CNY/ton)Equivalent in USD/ton
ChinaHDPE Blow MouldingPrice List7,600-7,700951-964
IranHDPE FilmOffer Given7,950-8,400995-1,052
ChinaHDPE FilmOffer Given8,2001,027
TaiwanHDPE FilmOffer Given8,0001,002
ChinaHDPE FilmPrice List7,800-8,000976-1,002
ChinaHDPE Pipe (PE 100)Price List8,0001,002
ChinaHDPE YarnPrice List7,300-7,500914-939
ChinaLDPE FilmPrice List8,350-8,5501,045-1,070
ChinaLLDPE Film C4Offer Given6,950-7,300870-914
ChinaLLDPE Film C4Price List7,000-7,100876-889

Transactions for import PE offers on LC at sight/TT, CIF China Main Port basis

OriginProductTransaction TypeOffers (USD/ton)Payment Term
Middle EastHDPE Blow MouldingOffer Given870-900*LC at sight
Middle EastHDPE Blow MouldingOffer Received910LC at sight
Far East AsiaHDPE FilmOffer Given920LC at sight
Middle EastHDPE FilmOffer Given860*-930LC at sight
Central AsiaHDPE FilmOffer Given950-955TT
Middle EastHDPE FilmOffer Received870*-930*LC at sight
Indian SubcontinentHDPE YarnSold860LC 90 days
Middle EastLDPE FilmOffer Given950LC at sight
Middle EastLDPE FilmOffer Received910-950*LC at sight
Southeast AsiaLLDPE Film C4Offer Given870**LC at sight
Middle EastLLDPE Film C4Offer Given830LC at sight
Southeast AsiaLLDPE Film C4Offer Received870LC 90 days
Middle EastLLDPE Film C4Offer Received830*-880*LC at sight
Southeast AsiaLLDPE Film C4Sold870**LC at sight
Description: *Offers for July shipment **Offers for July/August shipment

Tags: Asia Pacific,China,English,NEA,PE,Weekly

Published on July 2, 2020 1:59 PM (GMT+8)
Last Updated on July 2, 2020 1:59 PM (GMT+8)