China’s physical LLDPE trade slows on weak futures

07 June 2010 11:02  [Source: ICIS news]

SINGAPORE (ICIS news)--China’s physical linear low density polyethylene (LLDPE) trade has slowed to a trickle following sharp price falls on the Dalian Commodity Exchange (DCE), industry sources said on Monday.

"The sharp fall in futures prices has created a spectre that the physical market will weaken too, hence most buyers in the physical market have retreated to the sidelines in the hope of getting lower prices,” a trader in east China said.

Actual transactions were difficult to trace amid the thin trade, but some local distributors indicated selling ideas for imported grades at yuan (CNY) 9,600-10,300/tonne  ($1,406-1,508/tonne) EXWH (ex-warehouse), which were as much as CNY300/tonne lower from last week’s transaction levels.

Imported LLDPE was selling at CNY9,600-10,600/tonne EXWH in northern, eastern and southern China last Friday, according to ICIS-CBI pricing.

"The physical market has fallen into an uneasy silence as buyers are not interested to bid, and sellers are unsure what price to offer,” a trader in north China said.

Most local producers had also maintained their list prices unchanged at CNY10,050-10,250/tonne ex-works, local traders said.

In the US dollar denominated market segment, most traders were also refraining from dropping their offers as they believe due to the bearish sentiment further discounts would not entice buying interest.

A key trader in east China said he was offering imported LLDPE at $1,140-1,150/tonne CFR (cost and freight) China, for prompt lifting at the bonded warehouse, but buyers’ bids were around $1,100/tonne CFR China and that most buyers were only willing to take less than 50 tonnes.

A Middle East producer said he was holding out at his last transacted price of $1,170/tonne CFR China for June shipment, as he wanted to see which price point would be generally accepted in the physical market, following the steep price fall in the futures trade.

"We don’t want to hastily drop our prices as that would only create panic in the market,” he said.

Imported LLDPE was assessed at $1,160-1,230/tonne CFR China for the week ended 4 June, unchanged from the previous week, according to ICIS pricing.

($1 = CNY6.83)

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By: Chow Bee Lin
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