China MLLDPE gains capped by weak commodity PE market

SINGAPORE (ICIS)–Gains in China’s metallocene linear low-density polyethylene (MLLDPE) import market were being capped by weakness in the commodity PE sector.

Containers loaded into a ship at the Port of Qingdao in China’s Shandong province. (Photo by Wu Hong/EPA-EFE/Shutterstock)

Demand could pick up in late August or early September, when the Chinese market comes out of its seasonal lull.

C6 MLLDPE prices were assessed on 1 August at $1,200-1,220/tonne CFR (cost & freight) CMP (China Main Port), stable week on week, according to ICIS data.

Offers and deals for non-dutiable origin hexene-based (C6) MLLDPE were at $1,210-1,220/tonne CFR CMP.

Although early indications for August-shipment cargoes were firmer,  suppliers eventually scaled down their offers back to July levels due to strong buy-side resistance.

Buying interest from end-users remains tepid in view of a bearish commodity PE market and sluggish macroeconomic conditions.

C6 MLLDPE is trading at a strong premium to LLDPE, limiting processors’ flexibility to do product substitution with regard to blending formulations for downstream manufacturing.

However, some Chinese traders had little option but to procure larger-than-average volumes from producers in southeast Asia, as they had previously skipped or reduced July-loading allocations.

These traders were bracing for potential losses as prices in the domestic market remain lower compared with imports.

Deals for C6 MLLDPE cargoes took place at yuan (CNY) 9,500-9,700/tonne EXWH (ex-warehouse) in the week.

China’s MLLDPE import prices remain higher compared with those in other markets. The country mainly imports material from southeast Asia, as well as South Korea and the Middle East.

More intense competition in southeast Asia and India have suppressed MLLDPE import prices in these markets.

While low-priced US-origin cargoes have gradually begun making their way to southeast Asia and India, these materials are unable to penetrate the Chinese market due to prohibitively high tariffs amid the year-long US-China trade war.

China’s tariffs of 25% remain in place on $110bn worth of US goods.

Focus article by Leanne Tan

($1 = CNY6.90)

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