China LLDPE futures fall sharply on bearish sentiment

08 April 2009 10:17  [Source: ICIS news]

SINGAPORE (ICIS news)--Linear low density polyethylene (LLDPE) futures on China’s Dalian Commodity Exchange (DCE) have fallen sharply, reversing the past two-month uptrend as weaker crude values hammered sentiment, the local futures brokerage said on Wednesday.

Crude futures weakened on Wednesday morning in Asia to around $48/bbl, following sharp falls overnight of more than $1/bbl.

July LLDPE futures contracts were traded at yuan (CNY) 9,125/tonne ($1,334/tonne) during DCE’s morning session on Wednesday. This was 5% lower than the 7 April settlement price of CNY9,605/tonne.

According to DCE’s trading rules, a transaction price established after a 5% fall from the preceding day’s settlement price becomes the floor price, and subsequent offers below this level will not be accepted on the same trading day.

The last time transactions hit the floor price this year was on 11 February.

Anticipation that transactions in the physical markets would dwindle after domestic prices surged beyond CNY9,600/tonne EXWH (ex-warehouse) this week also exerted downward pressure on the futures markets, said Liu Wen Wang, an executive with Zhejiang Province Yongan Futures Broker.

Locally produced LLDPE was selling at CNY9,500-9,900/tonne EXWH in northern China, at CNY9,950-11,000/tonne in southern China and at CNY9,900-10,200/tonne in eastern China, according to China chemical market intelligence service ICIS chemease.

A general perception that China’s PE imports in the first quarter of this year had covered the shortfall in recycled resins also weakened sentiment, said Liu.

Recycled resins supply fell drastically in the last quarter of last year, when sharp price falls drove many suppliers out of the market, he said.

China imported 389,000 tonnes of virgin-grade LLDPE in the first two months of this year, around 74% more than the same period last year, according to China Customs.   

($1 = CNY6.84)

For more on PE visit ICIS chemical intelligence
Please visit the complete ICIS plants and projects database
To discuss issues facing the chemical industry go to ICIS connect

By: Chow Bee Lin
+65 6780 4359

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly