Print

The LDPE film market in China has shown some weaknesses in recent week as players report the end of the peak season for agricultural film sector. Couple of international suppliers have already down adjusted their offers to the country in orders to encourage buying interest. However, would this down trend sustain amid a series of production disruption within China and the region?

There are at least four LDPE plants in domestic China are off-line at the moment:

With an estimated production loss of more than 56,000 tons in line with these shutdowns, players in the country are hoping that market would remain steadfast despite fading demand from the agriculture film sector.

In addition, two major LDPE makers in Southeast Asia also face production disruption. Malaysia’s Lotte Chemical Titan shut its 230,000 tons/year LDPE unit on 9 April for 1 week due to water supply issues. Though the plant is scheduled to resume operation within this week, supply is affected to a certain extend. Singapore’s TPC planned to take its 180,000 tons/year LDPE line off-stream starting today, 17 April for approximate two weeks, following a shutdown at its ethylene supplier’s cracker. Both countries are among top ten LDPE exporters to China in 2016, with respective quantity at 130,000 tons and 70,000 tons, according to China Custom data.      

A market source commented, “Besides the tightening supply, most trader’s on hand cargoes are high costs, therefore we believed that suppliers, especially local traders, will not slash prices too much in the near term.” In fact, domestic LDPE film offers did not respond immediately to the falling futures market, remained relatively firm despite five straight falling sessions on Dalian Commodity Exchange last week.

Outlook for the medium term, however, hold high level of uncertainties with several events take place during late May, which might affect demand negatively.