Domestic PE demand spike in China

Chinese players on Sunday reported seeing better demand for PE in local market as buyers returned to their desks after the Dragon Boat Festival. Private data showed that total inventories from major local producers has dropped approximate 50,000 tons on Monday morning, triggering a more bullish expectation among sellers. Fresh price lists are announced increased CNY50-100/ton ($8-16/ton).

A trader reported, “We managed to conclude a good number of deals for LDPE and LLDPE film over the weekend mostly to converters in the agriculture sectors. We were surprised with such improvement as actual demand normally only pick up in August.”

Another market source added that domestic buyers continue to send in purchase inquiries today, however, majority deals are done at discounts. The source said, “It appears that the market is gaining solid support from several factors including low inventories pressure, currency exchange rate and also strong futures trade. This encouraged manufacturers to take slightly more than basic need to avoid production disruption. Our concern is the sustainability of the firming trend in futures trading which psychologically lifting spot market in the past two weeks.”

Looking ahead, players are not expecting any price reduction for the remaining of June, however, July outlook remains cloudy with the volatile energy and futures market.