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)
| Origin | Product | Transaction Type | Offers (CNY/ton) | Equivalent in USD/ton |
|---|
| China | HDPE Blow Moulding | Price List | 7,600-7,700 | 951-964 |
| Iran | HDPE Film | Offer Given | 7,950-8,400 | 995-1,052 |
| China | HDPE Film | Offer Given | 8,200 | 1,027 |
| Taiwan | HDPE Film | Offer Given | 8,000 | 1,002 |
| China | HDPE Film | Price List | 7,800-8,000 | 976-1,002 |
| China | HDPE Pipe (PE 100) | Price List | 8,000 | 1,002 |
| China | HDPE Yarn | Price List | 7,300-7,500 | 914-939 |
| China | LDPE Film | Price List | 8,350-8,550 | 1,045-1,070 |
| China | LLDPE Film C4 | Offer Given | 6,950-7,300 | 870-914 |
| China | LLDPE Film C4 | Price List | 7,000-7,100 | 876-889 |
Transactions for import PE offers on LC at sight/TT, CIF China Main Port basis
| Origin | Product | Transaction Type | Offers (USD/ton) | Payment Term |
|---|
| Middle East | HDPE Blow Moulding | Offer Given | 870-900* | LC at sight |
| Middle East | HDPE Blow Moulding | Offer Received | 910 | LC at sight |
| Far East Asia | HDPE Film | Offer Given | 920 | LC at sight |
| Middle East | HDPE Film | Offer Given | 860*-930 | LC at sight |
| Central Asia | HDPE Film | Offer Given | 950-955 | TT |
| Middle East | HDPE Film | Offer Received | 870*-930* | LC at sight |
| Indian Subcontinent | HDPE Yarn | Sold | 860 | LC 90 days |
| Middle East | LDPE Film | Offer Given | 950 | LC at sight |
| Middle East | LDPE Film | Offer Received | 910-950* | LC at sight |
| Southeast Asia | LLDPE Film C4 | Offer Given | 870** | LC at sight |
| Middle East | LLDPE Film C4 | Offer Given | 830 | LC at sight |
| Southeast Asia | LLDPE Film C4 | Offer Received | 870 | LC 90 days |
| Middle East | LLDPE Film C4 | Offer Received | 830*-880* | LC at sight |
| Southeast Asia | LLDPE Film C4 | Sold | 870** | 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)
