China LDPE Price Kept Falling on Weak Demand
In 2023, China’s LDPE price continued to fluctuate downwards. As of May 18, the LDPE price in North China was RMB 8,250/mt, down 29.03% Y-O-Y. The reasons for the notable decline were explained as follows.
In 2023, China’s LLDPE price also showed an overall downtrend. As of May 18, 2023, the LLDPE price in North China was RMB 7,910/mt, down 3.71% M-O-M and 9.86% Y-O-Y. As for LDPE, its price continued to fluctuate downwards from June 2022. As of May 18, 2023, the LDPE price in North China was RMB 8,250/mt, down 5.98% M-O-M and 29.03% Y-O-Y. Therefore, the price spread between LDPE and LLDPE kept narrowing and declined by 88.07% Y-O-Y.
From the perspective of China’s domestic supply, in 2023, maintenance of LDPE units declined and most producers maintained normal production with improving operating rates. From January to April, the average operating rate was around 85%, up 2.85% Y-O-Y, and the LDPE output increased notably, totaling 1,112.8kt, up 12.94% Y-O-Y.
As for imports, China’s LDPE import volume increased month by month in Q1, 2023, while the total import volume in Q1 declined Y-O-Y. As units in the Middle East took intensive overhauls in Q1, 2023, the overseas supply declined and the prices were robust. However, the supply in China increased on the release of newly added capacity, but the downstream demand recovery underperformed. Therefore, the price in China’s domestic market fluctuated downwards, dampening import arbitrage opportunities. Overseas resources flowed to Europe and the U.S. with higher profits, and China’s traders showed tepid buying appetites. Accordingly, China’s LDPE import volume declined to 736.6kt in Q1, 2023, down 5.36% Y-O-Y.
As for the downstream consumption fields, the LDPE consumption was mainly in the fields of agricultural film and packaging film. LDPE was mainly used in the field of agricultural film in Northeast China and Northwest China, in the fields of agricultural film and packaging film in North China, and in the field of packaging film in East China and South China. Although the operating rate of the agricultural film industry gradually improved after the Spring Festival, it underperformed from last year. The demand growth was limited and orders improved slowly. As for the packaging film, exports took a certain proportion in East China and South China. However, as the overseas demand weakened and export orders declined, operating rates some packaging film enterprises trended down and they purchased on a need-to basis, giving limited support to the LDPE price.
On the whole, as maintenance of LDPE units in China decreased, the output of LDPE improved notably and the supply was ample. Although the LDPE import volume in Q1 trended down Y-O-Y, it exerted limited impacts on the overall supply. Meanwhile, the demand recovered limitedly despite rising operating rate of the agricultural film industry. The domestic demand was limited, and overseas orders for packaging film dropped, so the LDPE price kept fluctuating downwards amid imbalanced supply and demand.
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