Aug East China LLDPE Price Change Characteristic
Preface: In August, prices of LLDPE once touched new lows in 2022. The Fed’s interest rate hike accelerated the decline in USD offers for LLDPE. Low-priced LLDPE resources arrived intensively. Shanghai Port and Ningbo Port are important concentration areas for imported resources in China. The inflow of imported resources impacted the LLDPE prices notably.
LLDPE price in East China was lower than that in other regions
China’s LLDPE fell to different degrees, and East China witnessed a larger decline. There were two main reasons why the price in East China was lower than that in other regions: First, low-priced imported goods were mainly concentrated in East China. Affected by Fed’s interest rate hike, the decline in USD offers for LLDPE accelerated. Shanghai Port and Ningbo Port are important concentration areas for imported resources in China. The inflow of imported resources impacted the LLDPE prices notably. In addition, the maintenance at producers gradually reduced in August, so the China-origin supply increased somewhat. The market supply was under pressure. Second, as for demand, the demand in East China was relatively weak. In September, the peak demand season for greenhouse film will come. Users in North China and other regions showed more interest in stockpiling LLDPE resources. However, there were not many greenhouse film plants in Shanghai, Zhejiang, Jiangsu and other places, so the demand growth was limited. Though prices in other regions fell, the demand lent certain support.
LLDPE prices trended downward
LLDPE market prices showed a downward trend in August. The price trends were roughly divided into four stages. 1. In the first three days of August, supported by high crude oil prices, the PE market fluctuated within a narrow range of RMB 50/mt or so, which was the high level in August. 2. From August 4 to August 15, LLDPE prices declined from RMB 8,100/mt to RMB 7,950/mt, down 1.85%. The main reason for the decline was that the LLDPE futures market followed the downtrend in the crude oil market. Although the futures market rebounded slightly amid the mismatch between supply and demand, the downtrend can not be reversed. 3. From August to August 21, the spot price of LLDPE decreased from RMB 7,950/mt to RMB 7,750/mt, down 2.51%, which was the new low in 2022. 4. From August 22 to August 30, the LLDPE price saw a small rebound of RMB 50-100/mt. The main reasons for the overall decline in LLDPE prices were the increase in supply, the impact of low-priced sources and less-than-expected demand recovery.
Low-priced imported resources weigh on China’s domestic market
From late July to early August, low-priced imported resources were poured into China’s domestic market, against the background of sluggish demand in the overseas market. The higher import price was reversed. The main reason was the impact of interest rate hikes. From late July to August, the import resources arrived at ports intensively. Affected by the low-priced resources, China’s domestic market kept falling. With the continuous strengthening of the USD dollar exchange rate, the price spread between the import price and China’s domestic price narrowed from about RMB 300 /mt to RMB 50-60/mt or so.
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