Chinese players: Local PE supply reduced on plant overhaul, outlook positive

There are several major PE producers in China have scheduled turnarounds in August 2016, tightening local supply just ahead of the traditional high demand season in September. The following table gathered information on plants that shutdown for 30 days and longer. Based on this, five major overhauls, resulted in an estimated production loss of over 260,000 tons in total – which is a considerable amount, players said.

Zoom into the breakdown, LLDPE supply is expected to reduce about 137,900 tons during this period, followed by HDPE at 96,800 tons and LDPE at 27,400 tons. With such drop in supply, it is possible that LLDPE and HDPE prices might gain some support to soar up in the near term.

A market source commented, “We see more HDPE cargoes are coming from the import market, which might hinder any significant hike. We think demand from the agriculture film sector would improve in September, as buyers need to replenish cargoes before the National Holidays. Market outlook in the coming month is very promising to us.”