In China’s PE market, sentiment has cautiously picked up as rising LLDPE futures and crude oil prices have boosted demand, helping local suppliers renew confidence after a prolonged period of price weakness.
Local PE sees first gains in 2 months
Traders operating in China reported that local PE prices witnessed weekly increases of up to CNY300/ton ($44/ton) after two months of consecutive declines.
The weekly averages of HDPE, LDPE and LLDPE film prices on ex-warehouse China basis have slightly rebounded from a more than ten-year low.
“Futures continue to rise and sentiment is improving. Buyers secure cargoes, albeit according to their urgent needs,” a trader in Xiamen commented.
LLDPE futures up 3% on week amid lower supplies
September LLDPE futures on the Dalian Commodity Exchange were CNY235/ton ($34/ton) higher from a week earlier on June 26, attracting PE buyers’ attention to the local market.
A few traders reported that two major producers’ overall polyolefin supplies have retreated since last week in line with improving market activity.
Crude oil rally contributes to sentiment
The recent surge in crude oil futures is also listed among the factors which have contributed to China’s improving PE sentiment. According to ChemOrbis Price Wizard, August WTI (NYMEX) crude oil futures have registered a cumulative gain of around $6/barrel for the past two weeks, reaching a five-week high.
Import market starts to stabilize
PE prices on CIF China basis have not seen any visible changes so far this week. The market has started to stabilize at its lowest levels since 2009 as demand towards import cargoes has slightly improved.
“Buyers still avoid purchasing beyond their needs due to the ongoing fluctuations in the yuan’s exchange rate. However, the number of done deals has increased, particularly following the news that China and the US will restart trade talks ahead of the G20 meeting. Easing trade tensions would have a very positive impact on the market,” a trader noted.
Is downward pressure over?
Despite the recent bullish developments in the market, some players are still feeling pessimistic regarding the PE outlook for the second half of 2019. “The long-term outlook remains uncertain amid upcoming PE start-ups and increasing concerns over global economic slowdown,” opined a player.