China HDPE yarn at three-month low as coal-based supply grows

Lucy Shuai

23-Jul-2018

SINGAPORE (ICIS)–High density polyethylene (HDPE) yarn prices in China’s domestic spot market are currently at their three-month low, after steadily falling since late May due to growing supply of coal-based material.

On 20 July, spot prices of HDPE yarn in east China were assessed at yuan (CNY) 10,875/tonne ($1,606/tonne) EXWH (ex-warehouse), down by CNY925/tonne or 7.8% from 25 May, ICIS data showed.

The assessment took into account the prices of both coal-based and naphtha-based material.

Coal-based output accounts for about 45% of China’s overall HDPE yarn production.

HDPE yarn can be used in the production of nets, ropes, small and medium-sized containers and colored stripe cloth.

In the first half of 2018, domestic supply of HDPE yarn was estimated to have increased by about 5.5% year on year, as more coal-based plants started producing the grade this year.

“Although naphtha-based supply is limited as PetroChina Fushun Petrochemical didn’t produce HDPE yarn from April to June, more coal-based plants produced the grade for good profits,” one trader said.

Based on current prices, HDPE yarn grades were higher by yuan (CNY) 1,577/tonne compared with LLDPE this year, more than double the CNY722/tonne gap in 2017.

Consequently, more coal-based HDPE/LLDPE swing units have switched to producing HDPE instead of LLDPE.

Six coal-based plants in China with about 1.8m tonnes/year of HDPE yarn capacity have been producing the grade this year.

Coal-based material was available last week at CNY10,400/tonne EXW (ex-works), lower by CNY800/tonne compared with naphtha-based prices.

A number of downstream factories in eastern and southern China were being lured by the low prices of coal-based HDPE yarn.

“Some factories making nets and ropes mixed about 50-70% of coal-based HDPE yarn into naphtha-based grade to lower costs,” a source from a downstream producer said.

“The factories making colored stripe cloth for sunlight shading or covering can all use coal-based grade,” the source said.

But factories that produce drinking containers must only use naphtha-based HDPE yarn due to properties of the materials and food certification, market sources said.

Spot prices of coal-based HDPE yarn have dropped sharply with oversupply in the market, prompting some coal-based plants to switch to producing other HDPE grades.

Meanwhile, PetroChina Daqing Petrochemical’s naphtha-based 240,000 tonne/year HDPE unit is undergoing maintenance from late July to mid-September.

The resulting reduction in supply should help stem the downtrend in naphtha-based HDPE yarn prices, a trader said.

Photo: HDPE yarn can be used in the production of nets, ropes, small and medium-sized containers and colored stripe cloth. (Mint Images/REX/Shutterstock)

Focus article by Lucy Shuai

($1 = CNY6.77)

READ MORE

Global News + ICIS Chemical Business (ICB)

See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.

Contact us

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?