Stronger energy costs prompt firmer stance from Polyethylene sellers in China

PE prices witnessed some increases over the past week as sellers took a firmer stance on their prices in response to the rally in crude oil and naphtha markets as per ChemOrbis. One Middle Eastern producer, who had stepped back on their prices last week, reinstated their initial July prices this week for LLDPE film while lifting their LDPE prices by US$10/ton above their initial July price. “We elected to restore our initial July prices as we had made some sales after stepping back last week and we now feel comfortable with our stock levels. Even though demand is not very encouraging, we plan to remain firm on our prices in the days ahead,” a producer source reported. A source at a Southeast Asian producer stated, “We raised our LDPE prices by US$20/ton when compared with our most recent sell ideas while we revised our sell ideas for HDPE film upwards by US$10-30/ton from our most recent sell ideas. Our customers are placing bids below our new prices but we are not willing to give any ground for now as our allocation to China is limited.” Prices also gained ground inside China’s local market over the past week. “We raised our prices to the local market this week in line with producers’ price hikes. We are skeptical regarding the feasibility of further price increases as our new prices are meeting with strong resistance from buyers,” a distributor based in Xiamen commented. Another distributor said, “Prices have risen this week and we believe that a stable to firmer trend will remain in place in the days ahead. However, we are proceeding very cautiously in our purchasing activities as we are limiting ourselves to back to back business in order to ensure our margins.” According to ChemOrbis, a converter manufacturing packaging film and bags stated, “Demand for our end products is not bad, but it is not as strong as it had been in some of the past few years. We are only purchasing in small volumes these days owing to persistently high raw material costs as well as cash flow constraints.” A converter manufacturing plastic pipes commented, “We are not able to raise our end product prices quickly enough to match the increases seen in polymer prices. The summer months are generally a slow season for our end products so we are in no rush to purchase for now.”
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