MonthlySSESSMENTS: June China PE Prices


  • PE price trend in the first half of June is the opposite of the trend in the second half

  • Demand for PE recorded weak over the course of the month

  • Inventory of the major polyolefin producers significantly reduced, but mostly went to traders

In June, PE prices in China were affected by some news about the relations between the U.S and China. In the first week, when China government revealed a plan to blacklist some unreliable American firms, SSESSMENTS was informed that local PE offers across different grades dropped between CNY50-150/ton ($7.2-21.8/ton) compared to the last week of May. Import HDPE, LDPE, and LLDPE Film C4 offers from Saudi decreased by $10/ton while for LLDPE Film C4 offers from Thailand by $5/ton. Bids placed for Brazilian LDPE and LLDPE cargoes were $100/ton lower than the initial offers. 

The same trend continued to the second week. Most of the downward adjustments applied by sellers were for LLDPE Film C4 offers, market sources reported to SSESSMENTS. Thai PE producer even corrected offers for the grade down twice, by $15/ton and $30/ton due to low bids submitted by buyers for Middle Eastern cargoes. In the same week, no deals could be concluded for HDPE Film from Taiwan although the offers have been adjusted down by $100/ton. In the second half of the month, PE prices changed momentum as President Xi and Trump talked via phone. As the futures market became firmer, the spot offers especially for local LLDPE Film C4 also showed increases. Import LLDPE Film C4 offers from Thailand also increased by $10/ton and $20/ton in the third week and by $25/ton in the fourth week. Meanwhile, offers for Saudi cargoes of all PE grades were adjusted up between $10-20/ton in the last week of June compared to the previous week.

Unlike offers, demand for PE was unchanged with the positive news of trade war. Some traders indeed made purchases due to speculation of higher prices. However, demand from converters was recorded weak until the last week of the month. Slow end product demand, in particular from the export market, has forced some converters to lower operating rates. Based on market players’ reports to SSESSMENTS at the end of the month, the operating rate of converters using HDPE and LDPE were around 60-70% while for LLDPE users, especially from the agriculture sector, the factories were only running at 40-50% rate. On the supply side, the major polyolefins producers’ inventory level stood at 820,000 tons at the end of the first week and increased 100,000 tons during the Dragon Boat Festival holiday. Later, the level gradually decreased and as of Friday, June 28, the inventory was already around 640,000 tons. However, most of the material flowed to traders instead of converters. Therefore, according to market sources market inventory for PE is still high.

Most of the market players contacted by SSESSMENTS expect a clearer market direction after the G20 summit and the trade talk. However, after the meeting, President Trump said that the tariff imposed will not be reduced soon, but the imposition for the additional $300 billion goods will be delayed. Therefore, some players predicted that PE prices in July would be stable. However, some players also opined that there are chances for decreases if demand for PE does not improve while inventory on traders’ end is high.

Tags: Asia Pacific,China,English,MonthlySSESSMENTS,Northeast Asia,Polyethylene (PE) China PE Prices,PE Prices

July 1, 2019 3:32 PM