FocusChina’s PE prices expected to rebound in late July

30 June 2011 09:33  [Source: ICIS news]

By Chow Bee Lin

Prices of PE in China are expected to rebound in late July when discussions for August shipments begin. SINGAPORE (ICIS)--China’s polyethylene (PE) prices are expected to rebound at the end of July when discussions for shipments in August begin, industry sources said on Thursday.

This is because of reduced domestic supply and improved demand for low density PE (LDPE) and linear low density PE (LLDPE), the sources added.

The domestic production of PE will reduce significantly because several major producers in China are planning to shut their plants for maintenance in July and August, the sources said.

The demand for LDPE and LLDPE film grades is expected to be strong in August-December because production in the downstream greenhouse film application sector is expected be in full swing during this period, local distributors said.

A stronger demand for LDPE and LLDPE will boost the buying interest for high density PE (HDPE), the distributors said.

China’s PE prices have been falling over the past eight to nine weeks because the tight credit lines imposed by the government and weak crude futures have weakened purchasing power and buying interest.

The weekly average prices of LDPE and LLDPE film grades fell by 9-11% from $1,665/tonne (€1,149/tonne) CFR (cost & freight) China and $1,375/tonne CFR China respectively in late April to $1,480/tonne CFR China and $1,240/tonne CFR China respectively in the week ending 24 June, according to ICIS.

The weekly average prices of HDPE film grade fell by 7% to $1,300/tonne CFR China in the week ending 24 June, down by $100/tonne from early May, according to ICIS.

Some resin producers in Asia said PE prices may not rebound if crude futures fail to stay above $90/bbl.

“The price scenario in the petrochemical sector will change if crude [prices] fall to below $90/bbl,” a regional PE producer said.

Crude futures were traded at around $92/bbl on Wednesday, supported by a larger-than-expected fall in US crude stocks and expectations that Greek lawmakers will approve austerity measures to avoid a default on the country’s sovereign debts.

($1 = €0.69)

Additional reporting by Lizzie Yu
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Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Chow Bee Lin
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