China PE Market Propped Up By Supply Condition
- Distinct pricing strategies applied both in local and import market
- No significant improvement recorded in term of demand
- Room for local PE prices to increase further is limited
Market sources expressed an opinion to SSESSMENTS.COM that the PE market in China is propped up by the supply condition. On July 13, upward adjustments of between CNY300-400/ton ($43-57/ton) were recorded on LLDPE Film C4 offers from a local producer. Likewise, a trader decided to increase local offers for HDPE Film by CNY200/ton ($28.5/ton) and by CNY100/ton ($14/ton) for HDPE Yarn and HDPE Pipe (PE 100) grades. While for local LDPE Film and LLDPE Film C4, the offers were recorded stable. All changes on the weekly comparison. For localized cargoes, SSESSMENTS.COM’s pricing database showed that the lowest offers are recorded for localized US HDPE Film cargoes at CNY7,700-7,800/ton ($1,101-1,115/ton) on cash, EXW China basis, and including 13% VAT.
From the import market, market sources reported to SSESSMENTS.COM that that import offers for HDPE Yarn and LLDPE Film C4 from a Thai PE producer surfaced with an increment of $20/ton and $10/ton, respectively. Contrastingly, import offers for HDPE Film from the Thai producer were reduced by $15/ton while mLLDPE C6 offers remain stable. All adjustments were compared to last week. In the meantime, sources revealed that another Thai producer managed to sell HDPE Film cargoes to China at $970-980/ton on LC at sight, CIF China Main Port basis, which is higher by $40/ton from last week’s done deal. As for other origins, August shipment offers for HDPE Film of South Korea origin increased by $50/ton compared to a fortnight ago. Likewise, the offers for import PE cargoes across all grades from the leading Saudi polyolefins producer captured at $40/ton higher from a week earlier. Further added, another Saudi producer also announced August shipment offers with an upward adjustment of $50/ton from July shipment’s level for HDPE Film. For LDPE Film and LLDPE Film C4, the producer does not have allocations to offer.
Compared to last week, there is no significant improvement recorded in terms of demand as players remain cautious amid various kinds of speculation in the market. Not to mention that buyers are also showing resistance towards the higher offers in the market. Pertaining to the delayed Iranian cargoes, market sources informed SSESSMENTS.COM that some big agents whose handling the materials were issuing force majeure (FM) letters on Wednesday, July 15 morning. Those big agents are giving two options to the customers; to keep waiting for the arrival without detailed information or cancelling the orders. However, the step taken was raising suspicion among market players on whether the agents are really clueless about the arrival date or the agents already know the time of arrival yet prefers not to disclose it. Hence, the agents will be able to sell the cargoes that previously booked below $800/ton-level at a higher level. Other sources also expressed their concern about the arrival time of the delayed Iranian cargoes. If the cargoes arrive at the same time with other origins, such as the Middle East and India, the price will most likely drop significantly. On the supply side, the inventory of the two leading Chinese polyolefins producers recorded at 725,000 tons as of Thursday morning, reduced by 15,000 tons compared to Monday’s level.
Looking ahead, market sources predict that there is still room for local PE prices to increase further considering the relatively tight supply in the market. However, sources opined to SSESSMENTS.COM that the increment would not be significant as the current levels are already too high. Moreover, some players are pessimistic on the futures price movement considering the arrival of imported cargoes, new plants that are projected to start production in H2 2020 as well as the state of demand in other countries.
Local/localized PE offers on cash, EXW China basis (including 13% VAT in CNY term, excluding VAT in USD term)
| Origin | Product | Transaction Type | Offers (CNY/ton) | Equivalent in USD/ton |
|---|
| China | HDPE Blow Moulding | Price List | 7,700-7,900 | 974-1,000 |
| Middle East | HDPE Blow Moulding | Offer Given | 8,200-8,300 | 1,038-1,050 |
| China | HDPE Film | Price List | 8,400 | 1,063 |
| Iran | HDPE Film | Offer Given | 8,900-9,200 | 1,126-1,164 |
| Taiwan | HDPE Film | Offer Given | 8,800 | 1,113 |
| USA | HDPE Film | Offer Given | 7,700-7,800 | 974-987 |
| Kuwait | HDPE Film | Offer Given | 9,000 | 1,138 |
| China | HDPE Pipe (PE 100) | Price List | 8,400 | 1,063 |
| China | HDPE Yarn | Price List | 7,900-8,000 | 1,000-1,012 |
| China | LDPE Film | Offer Given | 9,000-9,100 | 1,138-1,153 |
| China | LDPE Film | Price List | 8,850-9,150 | 1,120-1,158 |
| Iran | LDPE Film | Offer Given | 9,100-9,200 | 1,153-1,164 |
| Qatar | LDPE Film | Offer Given | 9,200 | 1,164 |
| China | LLDPE Film C4 | Offer Given | 7,400-7,650 | 936-968 |
| China | LLDPE Film C4 | Price List | 7,300-7,600 | 924-962 |
Import PE offers on LC at sight, CIF China Main Port basis
| Origin | Product | Transaction Type | Offers (USD/ton) |
|---|
| Middle East | HDPE Blow Moulding | Offer Given | 930 |
| Far East Asia | HDPE Film | Offer Given | 970 |
| Far East Asia | HDPE Film | Offer Received | 970 |
| Middle East | HDPE Film | Offer Given | 920-950 |
| Middle East | HDPE Film | Offer Received | 930-1,000 |
| Middle East | HDPE Film | Sold | 940 |
| Southeast Asia | HDPE Film | Offer Received | 950-1,000 |
| Southeast Asia | HDPE Film | Sold | 970-980 |
| Far East Asia | HDPE Pipe (PE 100) | Offer Received | 950-960 |
| Middle East | HDPE Pipe Black (100) | Sold | 1,160 |
| Southeast Asia | HDPE Yarn | Offer Received | 950-960 |
| Middle East | LDPE Film | Offer Given | 960-1,030 |
| Middle East | LLDPE Film C4 | Offer Given | 830-880 |
| Middle East | LLDPE Film C4 | Offer Received | 850 |
| North America | LLDPE Film C4 | Offer Given | 870-880 |
| Southeast Asia | LLDPE Film C4 | Offer Received | 920 |
| Southeast Asia | mLLDPE C6 | Offer Received | 1,020 |
Tags: Asia Pacific,China,English,NEA,PE,Weekly
Published on July 16, 2020 1:05 PM (GMT+8)
Last Updated on July 16, 2020 1:05 PM (GMT+8)
