Chinese players: Local LDPE film market weakens, import hold steady

Chinese players have partially resumed working after a long Lunar New Year holidays, however domestic trading activities remain lethargic this week. Despite such condition, other PE film grades continue to hold stable to firmer trend, except LDPE film prices, which have been softening in the past couple of sessions.

On an average, local LDPE film prices dropped CNY200/ton ($30/ton) week on week basis, CommoPlast data showed. While actually supply is still tight, many players are expecting rather bearish outlook for this grade in the near term. A trader said, “A good number of previously purchased cargoes are arriving to the main port, which could ease the current tightness. Meanwhile, converters are seeking alternatives to this grades given persistent high price levels that squeeze margins.”

In fact, it is reported that many converters are attempting to reduce the proportion of LDPE film used in their end products after both local and import prices hit multi years high levels in the previous months. A converter explained, “We could not fully cut out the use of LDPE film in our end products, yet we are able to place some proportion with mPE.”

Despite dull condition in local ground, import offers hold firm in the range $1360-1400/ton CFR China, LC 0-90 days term as traders are attempting to recoup the high costs. Meanwhile, with several major shutdowns within Asia region in the first quarter this year, overseas supply is tightening again amid high ethylene costs. It is the tug of war between sluggish buying interest and lack of international availability, prices however, might have to retreat from the multi years high levels, players said.

Domestic LDPE film prices in China are now reported at CNY11200-11900/ton ($1391-1478/ton without VAT), EXW China, cash term.