China HDPE film prices may dip after holidays

05 February 2008 04:46  [Source: ICIS news]

SHANGHAI (ICIS news)--High density polyethylene (HDPE) film prices in Asia may slide after the end of Lunar New Year due to dwindling demand and increasing supply, market sources said on Tuesday.

“HDPE film demand from the plastic bag industry has fallen since the government’s ban on plastic bags thinner than 0.025mm,” one of the sources said.

Demand also dampened further with Henan Huaqiang Plastic, the country’s largest shopping bag maker, declaring bankruptcy at end-January.

A manager of a mid-scale plastic producer located in Hebei, China said that his firm had almost finished all its plastic shopping bag orders before the holidays and had not received any new orders subsequently

Big clients like HuaLian Supermarket and Walmart had not placed new orders so far, he added.

One of his firm’s purchasers also said that they may not make plastic bag orders after the holiday due to the government ban. 

“The previous tight supply of HDPE film was gradually alleviated with increasing availability since the second half of January,” traders said.

They said that Henan Huaqiang Plastic, which used to purchase 4,000 tonnes of HDPE film each month had stopped stocking up material since late January and the producer could pour their stockpiles of about several hundred tonnes into the market.

Traders’ inventories of HDPE film were building up as most of the plastic processors would not be producing during holidays, traders said, adding that many converters would only resume operation until late February due to the enforcement of a new labour law.

The labour law, which came into effect on 1 January, essentially makes it harder for companies to dismiss workers.

Meanwhile Shanghai Petrochemical’s 250,000 tonne/year HDPE unit would continue to produce film throughout the holidays, a company source said.

“The output of Shanghai PC would add more cargoes into the market after the Lunar New Year,” a trader in east China said.

Prices of HDPE film had fallen yuan (CNY) 100/tonne ($14/tonne) this week on comparatively abundant supply and weak demand, said the trader adding that he was pessimistic at the outlook.

($1 = CNY7.19)

By: Longston Li
+65 6780 4359

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