CommoPlast

Overseas makers cut PE offers to China; market might have reached the peak

Overseas makers cut PE offers to China; market might have reached the peak



It is reported that couple of international producers have announced fresh PE offers to China on the second trading day of the week, mostly at softer levels compared to the last offering. Demand in China remains steady, which lead players to speculate the latest downward adjustment is due to sellers’ desire to lower inventories ahead of year-end closing.

A Middle Eastern producer conceded to $30/ton cuts on both LLDPE and LDPE film cargoes, bringing latest price list to $1150/ton and $1210/ton respectively, all based on CFR China, LC 60 days term. A good number of deals for LLDPE film cargoes are observed right after the price announcement, especially in Eastern China area, indicating the need amongst buyers to make replenishment.

“We have purchased a total of 5000 tons of Middle Eastern PE cargoes, which are due to arrive by late February. Import LLDPE film at $1150/ton CFR China is technically lower than January delivery futures contract on Dalian Commodity Exchange, hence very competitive. We think room for further reduction is now very narrow,” a trader commented.

Meanwhile, a Thailand producer has also offered $10/ton discount on both HDPE and LLDPE film in order to entice buying interest. Despite the adjustment, the price gap between the two grades remains relatively large; at $85/ton with HDPE film holds the premium. The producer’s price list stands at $1350/ton for HDPE film and $1265/ton for LLDPE film, all based on CFR China, LC AS term. A market source added, “Buyers are placing bids for HDPE at $20-30/ton lower than initial offers. Market might be hitting the cyclical peak though persistent tight supply might prevent any major reduction in the foreseeable term. We are waiting for the principal supplier’s decision on whether to accept the bids.”

There is another concern players are discussing regard the demand prospect during the pre-Luna New Year period. With large quantity of cargoes expected to arrive in February, pre-holiday replenishment activities might be weaker than usual, sources said. However, these concerns remain very subtle at the moment as market participants are watching out for further development.