Improved demand rescued China local LDPE market from nine falling weeks

It has been pretty depressed for the domestic LDPE film in China over the past two months as an effect of weaker demand from the packaging and agricultural film sector. Looking at the scale, domestic LDPE film based on EXW China, cash equivalent loss approximate USD120/ton as of mid-July compared to the cyclical peak during early May. 

Bloated inventories levels amid the traditional off-peak season has been the main factor driving prices lower, however, the trend has halted as demand is coming back. In fact, converters in the agricultural sector in Northern China area are restocking in preparation for the high-demand season.

“New orders are not very strong yet, however, at the current raw material prices, we are making healthy profit margins,” a converter said while planning to make continuous replenishment in the near term.

Agriculture season normally picks up by early September, sources said, which uplift expectation for better demand condition in the coming weeks. “We think the market has hit the bottom and likely to remain firm for now. We are in mid of preparing stock for the manufacturing season. At the moment, the profit margin is healthy,” a flexible packaging converter, informed.

Chinese traders are expecting to see the current stock to digest in no time and market might face a brief period of tightened supply in September as a result of weaker import arrivals. “We have not placed any import orders over the past months due to slow local market and depreciated Chinese Yuan. We have inquiries at the moment; however, our regular suppliers are unable to provide the quantity for deep-sea cargoes,” a source said.

While the upgraded trade war between China and the USA threatened export businesses seriously, converters are hoping that domestic demand for the Single Day sales would keep businesses on the positive side.