After a brief rebound, import PE to China continue to move lower on exchange rate

Market players were made believed firmly that import PE to China has found the cyclical bottom in early July as international suppliers refused to give additional discounts after healthy sales result during this period of time. The signal turned out to be a fault as international sellers introduced fresh cuts in line with the appreciation of the US dollars.

Looking at the LLDPE film market, import offers below the $1100/ton threshold have not repeated in two consecutive weeks of W28 and W29, instead, progressively firming up. Two major Saudi Arabia suppliers this week open August shipment offers in the range $1080-1090/ton CFR China, crashing all expectations. These price levels were attractive couple of weeks ago, but become less in buyer’s favour at the moment.  

One of the producers said, “We feel that the sentiment is not strong and buyers are mostly holding back due to fear of further depreciation of the Chinese Yuan that would make imports more expensive. We are offering some minor discounts on deals to smoothen sales and currently still having some remaining quantity.”

More producers are joining the wagon to open offers for deep-seas HDPE film cargoes at below the $1300/ton threshold, while prompt materials originated from Thailand and Taiwan also see $10-20/ton reduction week on week in spite of firm claims on reduced inventories pressure. 

Chinese customers are rather conservative and fear of the exchange rate and trade war remains a prevailing factor at the moment. In the meantime, it appears that suppliers are attempting to limit price reduction hoping that demand would pick up in August once the manufacturing season starts.