China’s LLDPE futures up 4.2% on soaring physical market

26 July 2011 12:51  [Source: ICIS news]

SHANGHAI (ICIS)--China’s linear low density polyethylene (LLDPE) futures rose 4.2% on Tuesday as soaring prices in the physical market boosted investor confidence, industry sources said.

The January LLDPE contract closed at CNY12,180/tonne ($1,888/tonne) on Tuesday, CNY495/tonne or 4.2% higher from Monday’s closing price of CNY11,685/tonne, according to data from the Dalian Commodity Exchange.

Further hikes in the physical PE market could drive the futures market higher, local futures brokers said.

Some traders in eastern China expect the physical market to strengthen further in the coming weeks as domestic supply will be tight because of scheduled maintenance being undertaken at several local plants.

However, many traders in southern China believe that prices in the physical market could be capped by persistently weak downstream demand.

Downstream demand is weak because many plastics processors in China are still grappling with cash-flow problems, as a result of recent government efforts to curb inflation through tight financial controls, traders in southern China said.

($1 = CNY6.45)

Additional reporting by Amy Yu

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