Chinese players: LDPE film supply might continue to ease

Over the past month, LDPE film prices in China appear to have cool down a little after surging to multi year high in November due limited availability. Despite of that, LDPE film is still traded well above other peer grades at the moment. Players in the country believed that supply would continue to ease in the near term with an intensive arrival of previously purchased cargoes and the start up of several new domestic plants.

It is reported that at least three LDPE plants in China came online during 2016, which total for approximate 800,000 tons/year capacity. And by second quarter of 2017, Zhongtian Hechuang would bring the 370,000 tons/year LDPE line on stream, marking a considerable expansion of China’s LDPE capacity. 

A trader commented, “Most of our cargoes are arriving by end of the month and with weaker downstream demand, we are looking at softer trend in the near term.”

In fact, couple of agriculture film manufacturers mentioned about seeking alternative materials for LDPE film as their profit margins squeezed by high raw material prices. A converter said, “Metallocene PE is offered at well below LDPE film in local ground at the moment, and we are testing the material to switch in order to cut costs.” This might dampen demand and hammer sentiment when cargoes arrive.