Arbitrage for China LLDPE film to Pakistan, Middle East still open

08 June 2011 08:13  [Source: ICIS news]

SINGAPORE (ICIS)--The arbitrage window for linear low-density polyethylene (LLDPE) film re-exports from China to Pakistan and the Middle East remains open, as the price gap between these regions has widened, industry sources said on Wednesday.

The prices of LLDPE film in the key China market have slumped by 12% since late March to $1,230-1,280/tonne (€836-870/tonne) CFR (cost & freight) and that has weighed on the buying sentiment in the Middle East, where prices are at $1,430-1,450/tonne DEL (delivered) Gulf Cooperation Council (GCC) and at $1,460-1,480/tonne DEL East Mediterranean (East Med).

The arbitrage window opened in March, when LLDPE prices in China fell at a faster pace than those in the Middle East (please see graph).

“The arbitrage [window] is open for LLDPE [film] from China to the Middle East. The gap is at about $150/tonne,” said a trader based in Dubai, who added this will likely support a further downward correction of prices in the Middle East.

Re-exports have been going on for the past two months, but sales volumes were small, a Karachi-based trader said.

Prices in Pakistan slipped below the $1,300s/tonne as a result of the re-export offers, while prices in India were hovering at the low $1,300s/tonne CFR, industry sources said.

“Although we are receiving offers from China, we have no intention to buy in view of this downtrend,” said a converter in India.

LLDPE film prices in the Middle East and Asia

($1 = €0.68)

For more on linear low-density polyethylene, visit ICIS chemical intelligence

Author: Sheau Ling Ong

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