Tight supply supports local PE prices in China amid dimishing demand 

The energy values tumbled to its lowest point in more than a decade last week, however, the Chinese PE market remains very firm regardless of the turbulence external environment, thanks to the limited supply condition. This week, again the crude oil prices move back to below $30/b on WTI, yet local PE sellers in China decided to lift their offers by CNY50-100/t compared to last week.

A trader in Xiamen said, "The supply for LLDPE film grade in local market has been pretty tight since last month following the peak agriculture season in Northern region, which attracted most of the cargoes. We heard that a number of sellers have oversold their ready inventory in hand. Besides, import market has not been able to balance the domestic supply condition with the extended shutdown at one of the major Middle East producer. Even our regular Thai supplier did not offer LLDPE film to China in the past one month."

There are still some last minutes pre-holiday purchases observed in the market, however, the number of deal concluded is rather subdued. A trader in Shanghai commented, "Some of our regular customers are checking on the offers but we could only conclude a very small deal. We see that LLDPE market is strong due to tight supply, about HDPE, film grade is doing much better than non-film grade now. We expect even slower market condition in the coming week as the Chinese New Year holiday is drawing near."

Import PE prices to China are currently quoted at $1010-1110/t for HDPE film, $950-1035/t for HDPE blow molding, $1050-1070/t for LLDPE film and $1100-1130/t for LDPE film, CFR China, LC 0 - 90 days term.

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