Chinese players: The heat in HDPE market is vaporising, correction is near

Import HDPE film to China has been steadily firming up since mid-July on the back of tightening supply, stemming from various issues including the ban in import plastics scrap that shackle the country’s recycle sector. However, prices seem to have hit the peak and started going down as it face stiff resistance from squeezed buyers.

Data from CommoPlast Price Index shows that the average import HDPE film price to China drops approximate $35/ton from last week and yet, buying interest is deteriorating quicker than expected. “We were hoping that the firm trend could sustain to November as it is the traditional high demand season from the flexible packaging sector, while a number of local producer switch to pipe grade die to better margins. Import market might become quieter for the remaining of the week if local suppliers continue to cut prices,” a market source commented.

Domestic HDPE film offers fall two consecutive sessions, shredding a total of CNY200/ton ($30/ton) on sluggish trading condition. Many Chinese players are taking conservative stance of wait and see, awaiting announcement from the government regarding any possible policy changes that would affect the market.

An international trader cuts offers for Saudi HDPE film by $20/ton from last week, to $1240/ton CFR China, LC AS term said, “Even with the reduction, buyers are very reluctant to enter deals. We are really concern over the near to medium term outlook.” Meanwhile, other supplier maintain offers in the range $1270-1290/ton CFR China with very few real transaction observed.

The recent escalated HDPE film demand in China has attracted a great number of cargoes from overseas sellers, including re-export parcels from Southeast Asia. Most of these shipments are scheduled to arrive by second half of November, which caused severe concern regarding the medium term outlook.