Locally-held LDPE prices regaining strength on tight supplies in China

In China, locally-held LDPE prices posted some significant increases over the past week due to tightening supplies, as per ChemOrbis. Following the conclusion of the Chinese New Year holidays in February, LDPE film prices were dragged lower as the market struggled with ample supply levels and slower than expected demand. This scene has started to change with the recent maintenance shutdowns in the country as prices are now gaining ground due to low stock levels. According to data from ChemOrbis Price Index, locally-held LDPE film prices climbed CNY450/ton (US$72/ton) in China when compared to last week. An agent of two local producers commented, “Domestic prices increased further on tightening supplies, but domestic demand is still weak. LDPE prices gained considerable ground following an explosion at BASF-YPC’s plant last week. The gap between LDPE and HDPE and LLDPE has widened again following the recent increases in LDPE prices.” A Shanghai-based trader also blamed limited stocks for higher LDPE prices. He said, “Prices are rising due to shutdowns, but the buyers are offering resistance, claiming that demand is not strong enough to support higher prices.” Another trader based in Shanghai stated, “Local LDPE increased mostly due to the fact that BASF-YPC’s stock levels have become limited given an unexpected shutdown at their plant last week. However, we are not optimistic about the outlook for the near term as demand is still disappointing.” Another trader expressed similar comments and stated, “Lanzhou Petrochemical, Daqing Refinery, Maoming and Shanghai Petrochemical all shut their plants for maintenance recently. In addition, Yangzi-BASF’s plant was also shut following an explosion at the plant. However, we think that demand will not support higher prices as buyers are maintaining a cautious stance to the market.” A distributor based in Xiamen stated, “LDPE prices gained further ground this week in the local market as supplies became tight after several producers shut their plants for maintenance. We expect to see additional gains over the near term as around one quarter of China’s LDPE capacities are currently offline.” Meanwhile, data from ChemOrbis Price Index also shows that the premium that local LDPE prices carry over local HDPE prices have widened with the recent increases posted in the LDPE market. Local LDPE film prices are currently trading with a premium of around $79/ton compared to HDPE prices. This gap is indicating the largest premium recorded since mid-February.