Price and market trends: China PE, PP import prices may weaken in end April/early May

19 April 2013 09:20  [Source: ICB]

Asian and Middle Eastern polyethylene (PE) and polypropylene (PP) producers are expected to cut their offers into China for May cargoes late this month amid weak buying sentiment, industry sources said on 12 April.

Demand is typically weak in the first half of May, while new capacity coming on stream in China soon is expected to further weigh on polymer prices, they said.

On 5 April, the benchmark linear low density polyethylene (LLDPE) and PP flat yarn grade average import prices were at $1,400/tonne (€1,064/tonne) CFR (cost and freight) China, and $1,420/tonne CFR China, respectively, according to ICIS.

China HDPE

Prices have been falling since mid-February because of weak downstream demand and soft feedstock prices.

Some importers may delay restocking activities to June, when new PE and PP plants in China start up, traders said.

"Many market players expect prices to come under downward pressure when supply from the new plants hits the markets," a Chinese trader said.

Wuhan Petrochemical is expected to start up its new polymer facilities - a 300,000 tonne/year linear low density polyethylene (LLDPE) plant; a 300,000 tonne/year high density PE (HDPE) plant; and a 400,000 tonne/year PP plant - in June, according to sources.

Market talk that ExxonMobil has started ramping up production at its two new linear low density (LLDPE) plants in Singapore - each with a 650,000 tonne/year capacity - also dampened market sentiment, regional traders said.

ExxonMobil has declined to comment on the production status of its plants.


PE prices lack support in April also because of the falling spot prices of feedstock ethylene in Asia, a regional producer said.

Ethylene spot prices in northeast Asia had fallen to $1,260-1,310/tonne CFR northeast Asia on 5 April, down by 4.1% from the previous month, according to ICIS.

But any price declines in end-April are expected to be moderate following recent sharp falls, a number of Chinese traders said.

China's LLDPE and PP yarn grade import spot prices have fallen by 2.7% and 2.4% respectively in the month ended 5 April, according to ICIS.

Some Chinese traders expect PE and PP import prices to rebound in end-May or early June, as plastics processors restock raw material ahead of summer consumption.

By: Chow Bee Lin
+65 6780 4359

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