China PE import prices on two-month uptrend due to tight supply

SINGAPORE (ICIS)–China’s polyethylene (PE) import prices have largely been on an uptrend over the past two months and look set to continue rising on the back of tight supply, particularly for high density PE (HDPE) film and blow-moulding (BM) grades.

The prices have been steadily heading north since end-June, on their way to hitting the highest levels so far this year, aided by the appreciation of the yuan which makes US dollar-denominated imports cheaper for Chinese buyers, industry sources said.

HDPE film deals this week were concluded at $1,150-1,195/tonne CFR (cost and freight) China, while HDPE BM grade was transacted at $1,120-1,155/tonne CFR China.

For LDPE film and LLDPE film grades, deals were concluded at $1,200-1,240/tonne CFR China and $1,120-1,180/tonne CFR China, respectively.

In the week ended 25 August, most PE prices were assessed at multi-month highs, rising 7-10% from end-June, according to ICIS data. 

HDPE film was at a six-month high of $1,120-1,160/tonne last week, while HDPE BM stood at their highest level so far in the year at $1,105-1,155/tonne, according to ICIS data.

LLDPE film and LDPE film CFR China prices were assessed last week at $1,110-1,160/tonne and $1,165-1,220/tonne – their highest levels since May.

Coal-based PE supply, which account for about a quarter of China’s PE production, is expected to tighten in September due to scheduled plant shutdowns, according to local distributors.

In northern China, major producer Pucheng Clean Energy plans to shut down its 300,000 tonne/year high density PE (HDPE)/LLDPE swing unit in Shaanxi province for a month-long turnaround from 10 September.

Shenhua Baotou Charcoal Chemical’s HDPE/LLDPE swing unit with the same capacity in Inner Mongolia, meanwhile, is due to undergo a 15-day turnaround from 4 September.

Production losses from the two plant turnarounds were estimated at 31,000 tonnes.

Meanwhile, availability of imports is also tight from Iran, which is a major PE supplier to China.

Some Iranian PE plants were heard running at a low operating rates since end July due to shortage of feedstock ethylene.

Iran’s Ilam Petrochemical has yet to restart its 300,000 tonne/year HDPE plant, which was taken off line in mid-July, an Iranian trader said.

Other plants in the Middle Eastern country such as those operated by Amir Kabir Petrochemical, Lorestan Petrochemical, Mahabad Petrochemical were heard to have cut production from end-July, the trader said, but the information could not be confirmed with the Iranian producers.

PE supply from the US is also expected to tighten following plant shutdowns in the US Gulf Coast, which was pummelled by Hurricane Harvey.

In July, China took in a total of 30,951 tonnes of US PE, accounting for 3.6% of its total imports of the polymer for the month, according to official data.

“We had received the news from American producers, they set to talk with their customers about the cancellation of products. And they seemed no hope of business come back to normal in the rest of this year,” a south China-based trader said.

Market players are also concerned over a possible delay in starting up of new capacities in North America following the production disruptions wrought by Harvey.

Focus article by Angie Li

Pictured above: Plastic bags in an open market in Xinjiang, China. Polyethylene (PE) is used in plastic bags. (Source: PhotoAlto/REX/Shutterstock)