As demand slows down, local PE producer offers discount scheme in China

It is reported that a major local producer in China has opened a discount scheme of CNY50-100/ton ($7-14/ton) on LLDPE and HDPE film in Northern China area following a visibly slow down in purchasing interest. The maker was offering at CNY9900/ton ($1237/ton without VAT) for LLDPE film and at CNY11,200/ton ($1399/ton without VAT) for HDPE film before this. 

The post-holiday replenishment activities for PE in China are not as strong as many expected. Converters in the flexible packaging and agricultural film sectors remain very cautious about making large purchases considering the steep reduction in the upstream ethylene costs. 

In fact, ethylene costs based on CFR Northeast Asia term plunge $90/ton since 28 September – the final trading day before the Golden Week in China, to $1140/ton as on 11 October. 

“Demand for our end product is stable, the thing is that customers are no longer placing long-term contract orders like they used to, instead, month-on-month basis. And therefore, we also need to re-planning our purchasing activities,” a flexible packaging converter said. 

The futures market is losing momentum and has been traded in the red zone for three consecutive sessions. Chinese buyers are watching out if the recent reduction is just a technical correction or a turn-around. “We think the discount scheme is not attractive enough, hence might wait until next week before making fresh buy,” another converter added.