Dalian polymer volumes remain under pressure

Dalian Jun10.pngChina’s Dalian futures market has been the global centre of speculative polymers trading for over a year. It traded an amazing 80 million tonnes of LLDPE in April 2009, as excitement built. And volume (blue line) remained positive on a year-on-year basis until January. But since then, comparisons have been negative:

• February’s volumes were down 50% versus 2009; March was down 38%; April was down 74%; and now May was down 46%.
• Volumes on the new PVC contract are also lower, at just 7 MT in May versus 44 MT in December.

Equally, pricing (red line) has been on a declining trend since February, even though crude oil prices rose strongly until April. This divergence is also a warning sign, as it suggested traders were beginning to question the physical market’s ability to pass-through ever higher prices.

For the moment, both the bulls and the bears can still present an argument for their case. But the bulls need a quick recovery in volume, if prices are not to remain under pressure.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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