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Chinese players this week start to report a notable increase in domestic LDPE film prices, which market blamed the lack of prompt cargoes to be the primary cause. In fact, CommoPlast data showed the latest deal concluded today at CNY10300/ton ($1320/ton without VAT), some CNY150/ton ($22/ton) increased since the week begins.

It is interesting that buyers, especially in northern China area, are actively searching for material despite the increases. A film converter said, “We have lifted our production rate to 60% recently as the end product order start to come in. September is traditionally high demand season for agriculture film; therefore we plan to stock up some inventories now. Supply is very limited and we think prices might continue to firm up in the near term.”

The main LDPE producer in northern China – Lanzhou Petrochemical is currently under maintenance shutdown. The 200,000 tons/year LDPE plant was brought down on 11 August and would only resume production by end of September. For this, LDPE film traded in northern area is carrying CNY100/ton ($15/ton) premium over the eastern and southern China market; yet traders are not eager to divert their cargoes due to inability to locate sufficient quantity from import market.

A trader in Shanghai said, “Our Iranian and Qatar suppliers are having very limited quantity as a result of production issues. We have placed some purchases recently, however the parcels would only arrive by late September to October. The peak seasonal demand is around the corner, hence we expect to see firmer prices in the near term, especially when ethylene costs are moving up.”