Players in China's PE markets bracing for further price reductions

This week, players in China’s PE market are expecting to see further price reductions, as upstream costs continue to dip while buyers prefer to wait in the sidelines to see more competitive prices, as per ChemOrbis. Rising availability for Central Asian origins and mounting difficulties concluding re-export deals are also weighing down PE prices in China, with some traders hinting that deals can be done at prices nearly US$100/ton below the prevailing market levels for buyers willing to place firm bids. We have heard that some traders are willing to conclude LDPE film deals with significant discounts from the prevailing price levels as availability for Central Asian LDPE is already sufficient and more cargoes of this material are said to be on the way,” reported a trader based in Ningbo. A trader in Shanghai added, “Our monthly allocation for Central Asian LDPE film has increased by around 10,000 tons and we believe that this extra supply will remain in the market over the next few weeks. Supply for Central Asian HDPE and LLDPE film is also sufficient, but has not risen to quite the same extent as LDPE film supply has.” In addition to longer supplies for Central Asian origins, several traders complained that they are having a harder time concluding re-export deals these days. A Ningbo based trader told ChemOrbis, “We managed to conclude some re-export deals for LLDPE film to Southeast Asia last week, but we are having an increasingly difficult time concluding re-export deals as prices have dropped in that region and the price differentials between China and Southeast Asia have narrowed to the point that re-export business is not very viable.” A trader based in Shanghai complained, “We have been looking into the possibility of selling some material on a re-export basis to South Africa or the United States, but have had a hard time finalizing deals given higher freight rates along with fears that buyers in these countries may cancel their orders if prices continue to fall while their cargoes are en route. We also have some Iranian material in our stocks, but buyers in many countries cannot accept these cargoes due to international economic sanctions.” Overseas producers complained that they have been having a difficult time concluding deals as many buyers are sticking to the sidelines for now. “We revised our sell ideas for HDPE film downwards by $90/ton last week due to the competitively-priced options available in the market,” a source from a South Korean producer reported. A source at a Southeast Asian producer commented, “We reduced our sell ideas for HDPE and LDPE film by $130-140/ton last week but are still having trouble attracting buying interest. We are considering reducing our operating rates if demand does not pick up over the next few weeks.” A source at a global producer added, “We lowered our prices for Saudi Arabian HDPE film by $120/ton late last week in order to speed up our sales. Buying interest remained sluggish even after our price reductions and we are willing to negotiate with buyers placing firm bids.” On the buyers’ side, converters reported that they are not very active in the market for now as they are expecting to see lower prices in the days ahead, adding that they are seeing slower than expected demand for their end products, as per ChemOrbis. A converter manufacturing plastic bags stated, “We are not willing to purchase in excess of our immediate needs for now even though our suppliers have indicated that they are willing to give some discounts. We expect to see lower prices in the days ahead and are running our plant at reduced rates due to slower than expected demand for our end products.” Another plastic bag manufacturer complained, “We are purchasing in smaller volumes this year as demand from our European customers has weakened. We are sticking to the sidelines for now as we have enough stocks to cover our urgent needs and expect to see further price reductions in the days ahead.”
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