Import PE to China plunged to multi-month low; bottom might be near

The import PE market in China has been persistently following a softening trend since early May, after players returned from the long Labour Day holidays. This week, import LLDPE and LDPE film to China hit the lowest levels since beginning of November 2017 and sources fear that this trend could persist in the coming days.

It appears that overseas sellers are facing tremendous sales pressure, as demand here has not picked up for an extended period. At the other end of the market, buyers are suffering from slow end product businesses amid escalated trade splash between China and the USA.

In a latest development, Indian LLDPE and LDPE film is concluded at below the $1100/ton threshold, at $1090/ton CFR China, LC AS term. Such move is expected to drag the upper end of the overall price range down in the coming days as buyers are now attempting to put more pressure on other sellers.

“We managed to secure some quantity for regular Saudi Arabia LLDPE film at $1120/ton CFR China, LC AS term, a $30/ton drop from initial price list. At the moment, we are monitoring the next development in the trade war before making additional buy,” a trader reported.

In the meantime, sources appear to believe that market has touched the floor price and less likely to breach below the $1090/ton levels. “This is because we started seeing some buying interest from the mulch film converters while preparation for the Single Day sales shall begin soon. The only issue is that buyers are still reluctant with cargoes priced at the upper end of the overall range,” an international trader added.

Many Chinese traders are holding high inventories levels, especially for LDPE film, with hope that stronger demand from the agriculture and packaging sector would help to deplete the stock. A buyer informed, “We might have to wait for couple of weeks more before the preparation for the Single Day sales start. And therefore, outlook for July remains bearish to us.” 

Would China and the USA continue to pursue hard tariffs on the second list of products, which include crude oil, petrochemical and packaging products, Chinese buyers might put USA’s PE cargoes off the option for other origins. “Things are still unclear at the moment and therefore, we plan to adopt a more cautious stance going forward,” a buyer said.