LLDPE prices losing premium over HDPE in China

LLDPE film prices in China’s import market are beginning to lose premium over HDPE film prices as per Chemorbis. For much of H2-2010, LLDPE film prices gained ground against HDPE film on comparatively better demand for LLDPE film combined with limited availability. Steady HDPE supply levels along with weaker demand from several major HDPE applications depressed HDPE film prices in China, leaving them considerably below LDPE and LLDPE film prices for most of the latter part of 2010. Over the first two months of 2011, however, LLDPE film prices have been losing their premium over HDPE film prices in China’s import market, although LDPE film prices continue to carry a healthy premium over both HDPE and LLDPE film. PE demand has not been up to sellers’ expectations so far this year, especially since the end of the Chinese New Year holidays. PE demand in general has failed to pick up in China even as sellers in the PP, PVC and PS markets have succeeded in implementing post-holiday increases with the support of strengthening demand. Although LLDPE sellers are not alone in complaining of weaker demand following the holidays in China, HDPE sellers have been able to push through larger increases given the extremely thin spread between spot ethylene prices and import HDPE film prices. Since the start of 2011, data from ChemOrbis Price Index indicates that import HDPE film prices on a CFR China basis have risen by US$10-25/ton while LLDPE film prices have gained only US$10/ton on the lower end of the range and LDPE film prices have firmed up by US$20/ton on both ends of the range. When comparing average prices for HDPE film and LLDPE film for the first seven weeks of the current year, the average HDPE film price has gained US$30/ton relative to the average price for LLDPE film as LLDPE sellers offering at the higher end of the overall range for this product have been complaining that they are facing an increasingly difficult time concluding deals.
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