Chinese players: Tight import PE availability might support prices but the upside depends on demand

Chinese players have been reporting a limited number of new import PE offers over the past couple of weeks as a result of active shutdown at major overseas producers. 

The following table detailed out the shutdown schedule

Tighter availability, especially for LDPE film, has provided healthy support to the import market, which insulates prices from the declining trend that has been taking place in the local ground since after Lunar New Year. But it appears that the support is not strong enough to push offers any significantly higher.

Data from CommoPlast suggests that the average import PE film to China inched $5-10/ton higher by the week ending 5 April compared to the beginning of March, to $1040-1095/ton for LDPE film, $1040-1150/ton for LLDPE C4 film and $1090-1195/ton for HDPE film, all based on CFR China, LC 0-60 days term.

Players are not expecting the prices to surge strongly in the near term given the fact that local ground is still enjoying comfortable supply. At the time this report is published, total PP and PE inventories at Sinopec and CNPC’s warehouses reach 975,000 tons – higher than the usual psychological benchmark of 800,000 tons. 

“At the current demand condition, it might be challenging to lift prices too high. The manufacturing season is about to start, we hope purchasing interest would improve,” an international trader said.

Many converters in China continue to source local cargoes based on hand-to-mouth basis citing the slow end product demand. The recent VAT rate reduction fueled expectation that local suppliers would have to lower prices, which encourage a more wait-and-see stance among buyers.