Falling local LLDPE film pressure import market in China

The firming trend in domestic LLDPE film in China that stretched for six consecutive weeks since late March 2018 has now come to an end. CommoPlast data recorded a drop of $40/ton on an average in local price since it reached the cyclical peak in the second week of May and sources are expecting further fall to take place in the near term.

The previous constant hike was mainly supported by the tight supply condition amid a number of plant shutdowns in local ground, while demand from the agricultural film sector was strong. “However, the agriculture season is now ended, leaving the market with a rather comfortable supply condition, which is a result of heavy import arrival from the previous purchases,” a trader said.

Sentiment in the local ground has been weak throughout the past week especially with September delivery contract on Dalian Commodity Exchange see little sign of improvement. LLDPE futures have been on a downtrend since 9 May and currently traded on the same par with PP futures, which is very unusual.

The impact on the import market, therefore, becomes inevitable. The average import LLDPE film offers to China dropped approximate $35/ton compared to the second week of May, CommoPlast Price Index – Average Value showed.

“We stepped back on LLDPE film offers to China by $40/ton to $1250/ton CFR China, LC AS term, and yet, sales were rather disappointing. The market is not responding to the fact that ethylene costs are high,” a Thailand market commented on last Friday, 1 June 2018.

Middle Eastern suppliers also down adjusted import LLDPE film to China in the range $10 – 30/ton compared to the previous week and deals were reported at $1170-1180/ton CFR China, LC 0 – 60 days term. 

“We do expect further reduction to take place in the near term as there is a confluence of factors that pressuring the market right now, including weak demand, soft local market and stronger US dollars,” another market source added.