Will China PE Imports Revive with Arbitrage Opportunity Emerging?
From January to April, China’s total PE import volume reached 4,212.2kt, down 7.44% Y-O-Y. The PE demand was lower than expectations in Q2, and the overall PE price trended down. As of May 31, offers from overseas producers kept falling from last week, with offers for LLDPE ranging $890-960/mt (RMB 7,735-8,330/mt) in the Middle East, indicating that import arbitrage opportunities were emerging.
In May, prices of various PE products fluctuated downwards despite unit maintenance at Sabic’s Petrokemay and Jam Petrochemicals. Meanwhile, downstream industries were in a demand slack season, and the USD exchange rate went up, dampening the trading atmosphere. On the whole, the demand didn’t see improvements and China’s PE market price was at a low level, so offers from overseas producers kept falling.
This week, PE offers from overseas producers kept falling from last week, with the LLDPE offer in the Middle East ranging $890-960/mt (RMB 7,735-8,330/mt). Although PE import arbitrage opportunities are seen, the PE imports may not improve in the short term due to the overall weak demand for PE.
According to GACC, from January to April, China’s total PE import volume was 4,212.2kt, down 7.44% Y-O-Y. The import volume in April was 957kt, down 13.57% M-O-M and 2.39% Y-O-Y. In the future, despite import arbitrage opportunities, China’s traders will show tepid importing appetites due to low PE prices in China’s domestic market and rising USD exchange rate. However, as the overseas unit maintenance will come to an end and the demand in Europe and the U.S. will underperform, overseas producers may increase their exports to China. Therefore, the arrival of deep-sea cargoes at China’s ports will likely gradually improve.
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