Price and market trends: China’s PE import prices expected to rise in H2 March

17 March 2014 00:00 Source:ICIS Chemical Business

China’s polyethylene (PE) import prices are expected to rise in the second half of March because of stronger demand from the mulch film sector and tighter import supply, sources said on 6 March.

But any price increase may be capped by lower domestic prices, they added.

The EXWH (ex-warehouse) domestic prices of imported PE grades in China were expected to rebound in the coming weeks, after falling by more than 2% in February, and that in turn could push the CFR (cost and freight) China prices higher, China-based traders said.

Asia LLDPE

But the CFR China prices would still be higher after the domestic prices rebounded because the existing price gaps between the two price points were too wide and hence unlikely to disappear immediately, the Chinese trader said.

The CFR China and EXWH prices of PE were on average trading at a spread of $50/tonne this week, they said.

In the week ended 7 March, the benchmark LLDPE film grade resin was trading at $1470-1520/tonne CFR China, and at CNY11,100-11,300/tonne EXWH east China which yields an import parity of about $1,450/tonne CFR China, market sources said.

Mulch film production in China was expected to go into full swing in March, hence the demand for film grades low density PE (LDPE) and linear LDPE (LLDPE) was likely to pick up, Chinese traders said.

But most of the Chinese traders believe that any increases in the LDPE and LLDPE prices were likely to be moderate, because of the amply supply of these grades from local and overseas suppliers.

Chinese PE producers were estimated to be still holding high inventory of LDPE and LLDPE, built up during the Chinese New Year holiday lull from end January to mid-February, traders said.

LDPE exports from Iran rose significantly in January where 48,754 tonnes of material arrived in China, 22.05% higher compared with the preceding month and 11.96% higher from the same month in 2013, according to China custom’s data.

The import prices of high density PE (HDPE) were expected to be supported by tighter regional supply caused by the maintenance shutdown of two plants operated by major Thai producer, PTT Global Chemical (PTTGC).

Iranian HDPE export volumes to China are expected to fall in March because of reduced HDPE output from a number of Iranian plants, China-based traders said.

Any increases in China’s PE import prices could also be capped if new policies are announced at the meetings of China’s top brass this week, aimed at further cutting China’s economic stimulus funds or curbing local credit and the domestic property market, one of the China-based traders said.

By Chow Bee Lin