China market resumes trading on stable to firmer levels

Most Chinese players in the PP and PE sector have returned to their desks after a week-long National Day holiday. Buyers have not shown any clear respond to the recent development in the upstream ethylene market, however, traders maintain domestic offers stable to CNY50-100/ton ($7.5-15/ton) higher compared to the pre-holiday period.

A trader said, “Many of our customers call this morning to check on the latest offers, yet the number of deals concluded is rather mediocre. We are pushing for delivery for cargoes purchased before the holiday, which means, buyers might have longer inventories to wait for clearer direction.”

At the meantime, suppliers are very optimistic about the outlook in October as it is the traditional high demand season from the packaging and agricultural film sector. “We do expect buyers to become active soon in preparation for the year-end festive season. We are not having much inventories on hand, therefore we would not rush to take any price decision,” another trader commented.

In the import ground, most international suppliers have not opened fresh offers, though traders started giving PE prices at relatively high level. Middle Eastern HDPE and LLDPE film are mostly above the $1200/ton threshold, CFR China, LC AS term. A source added, “Iranian HDPE cargoes are delayed further to November, which keep HDPE availability in the market very tight. We do not expect any sizable adjustment in PE prices even with the current ethylene costs.” Import LLDPE film from Middle Eastern to China stand at $1190-1220/ton CFR, LC 0-60 days term.

While international players are showing strong concern over the impact of the up coming Communist Party Congress on the market, Chinese players are in contrary, taking this issue very lightly. “Converters are back to work since late last week. With the Congress taking place, market might be more stabilized, however buyers would still need to make replenishment to ensure safe inventories levels,” a market source said.

Domestic prices at the moment stand at CNY8750-9100/ton ($1126-1171/ton without VAT) for homo-PP; CNY9450-10050/ton ($1216-1294/ton without VAT) for LLDPE film; CNY‎10150-10650/ton ($‎1307-1371/ton without VAT) for HDPE film and at CNY10250-10650/ton ($‎1319-1371/ton without VAT) for LDPE film, all based on EXW China, cash term.