Import LLDPE film to China irresponsive to firming ethylene costs, is bottom near?

Ethylene market in Asia has been surging since end of November 2017 on strong buying interest in China and tightening supply due to major cracker overhaul. However, downstream PE market has not responded to the development. In fact, import LLDPE film to China continues moving lower as weak demand anchors the trend.

CommoPlast data showed a jump of more than $40/ton on ethylene costs based on CFR Northeast Asia term this week compared to the final week of November. In the same period, the average import LLDPE film prices to China fluctuate significantly to reach lower level, creating a gap of nearly $200/ton with ethylene taking premium.

However, players are expecting import LLDPE film market to be nearing the bottom given good response for cargoes priced below $1150/ton threshold. “We have sold USA and Iranian LLDPE film at $1130-1140/ton CFR China, LC 0-90 days term. We think there is no more room for the lower end of the overall price range to drop further, though a rebound is unlikely as supply is rather comfortable,” a trader said.

Besides the sufficient availability for LLDPE film from overseas sellers, it is reported that Ningxia Coal Phase II has successfully produced prime grade, easing local supply even further. The downward pressure is now on the upper end of the overall price range, sources said, claiming that loosening supply would dilute the opportunity for market to firm up even with the support of strong ethylene costs.

Import LLDPE film to China currently stands at $1130-1185/ton CFR China, LC 0 – 90 days term.