Homo-PP, LDPE prices continue to fall from post-2008 highs in China

After having peaked to highest levels seen since 2008 in China in early December, domestic homo PP and LDPE prices have been losing ground since, as per ChemOrbis. This is because many Chinese converters have been winding down their business in the midst of the looming Chinese New Year holiday to be celebrated in the first week of February. Following the gradual declines of the past six weeks, domestic homo PP and LDPE prices have come back to where they were before the Chinese National Day Holiday in early October. According to ChemOrbis Price Index, domestic homo PP prices have posted a cumulative loss of over US$100/ton (around CNY606/ton) in China in the past six weeks, although some players have recently started to voice their expectations for a stabilization in prices prior to the approaching Chinese New Year holiday. “We believe that local producers are trying to pare down their stocks before the Chinese New Year holidays, but most probably prices will stabilize after the holiday period. We are feeling comfortable with our stock levels and are in no rush to sell,” a distributor based in Ningbo reported. Another distributor said, “We think that prices will follow a mostly stable trend until the holidays and we believe that the state of demand will determine the market outlook after the holiday.” In the PE market, domestic LDPE prices have posted a sharper cumulative decline of more than US$150/ton (around CNY925/ton) since early December, according to ChemOrbis Price Index. Other PE products, namely HDPE and LLDPE film, however, have remained mostly stable. This is because these products did not record gains as large as LDPE did in late 2013. Regarding the likely direction of the market, a second distributor opined, “The key point for the market will be supply-demand. Players will be sidelined from the market starting from January 25 for the Chinese New Year holiday in the first week of February. On the other hand, supply remains limited on the side of producers/distributors, which prevents erosion in prices.” A third distributor said, “The absence of demand may be counterbalanced with firm upstream costs and result in stable prices. In the meantime, producers may face accumulated stocks if demand remains sluggish even though they may reduce their operating rates. We think that major domestic producers may have to continue to surrender to price cuts if they face stock pressure after the holiday in February.” According to ChemOrbis, import PP and PE prices, meanwhile, remain mostly on a steady note, posting only modest discounts on deals, players reported.