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As reported earlier, the domestic LLDPE film market in China plunged steeply since the beginning of April due to slow demand from the agricultural film sector while local inventories remain more comfortable than expected. 

According to CommoPlast Price Index, the average LLDPE film price based on EXW China, cash equivalent has fallen around $50/ton by the time this report is published. 

The downtrend in the local LLDPE film market might persist in the post-holiday term would buyers remain reluctant to make larger replenishment. Data from CommoPlast suggests that as on 30 April 2019, total PP and PE inventories at Sinopec and CNPC’s warehouses stand at 855,000 tons. This number is expected to jump 120,000 tons throughout the four (4) off-days starting 1 May 2019 to roughly 975,000 tons – which is 15% higher than the same period last year. 

The bearish sentiment in the local ground is forcing overseas suppliers to soften the stance on the import offers to the country regardless of the recent recovery in the Dalian Commodity Exchange.

Indeed, Indian LLDPE film cargoes are now available at $1000-1010/ton CFR China, LC AS term – down $20-30/ton from a week earlier while Thailand maker has voluntarily lower prices by $20/ton to $1080/ton with the same term.

“The LLDPE film market is under the downward pressure from multiple angles, including lengthy supply and weak upstream ethylene costs. Customer must be able to off-take larger quantity in order to digest the current inventories,” a trader said.

Since the Chinese government imposed a broad prohibition on the import of plastics scrap, demand for prime grade LLDPE has picked up significantly. In fact, in the first quarter of 2019, total LLDPE arrival to China reached 1,328,500 tons, up 35% from 2018. Such growth is rather impressive thanks to the growing demand from the flexible packaging sector, especially those targeting the e-commerce industry. Players are now watching out if the growth could expand further in the coming months. 

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