MOSCOW (MRC) - Asian market players expect demand increase in China later in July, when converters are to start to build up stocks before the beginning of the season - according to MRC Price reports
Chinese plastic goods producers usually start to increase production in August to ensure exports to Europe and the USA before Christmas and New Year holidays. The agricultural season that usually lasts in China from September to December will push up demand for film-grade LLDPE, which is going to stimulate consumption of all the other types of polyethylene.
In May - June, polyethylene demand in China remained weak. Prices for imported material went down by USD 200-250/mt since May. In view of weak demand for LDPE in China, some Asian producers switched to production of more profitable EVA. Low interest in film-grade HDPE in the Chinese market made some producers from Taiwan, Thailand and South Korea redirect production toward other HDPE grades, as well as to redirect exports to the markets of SE Asia, where demand for film-grade material is stronger.
As to market players, these factors together with suspensions of a number of plants in the Middle East may lead to serious limitations in HDPE supplies to the Chinese market in July - August.
PE demand remains weak in China, today. Prices continue to go down despite the limited supply. However, positive dynamics in stock market and the market of oil futures in conditions of the decision of Chinese authorities to increase flexibility of Yuan exchange rate give reason to think that PE prices are going to reach their bottom soon. At the same time, some Chinese importers tell about their fears that strengthening of Yuan may limit export potential of Chinese plastic products, which can lead to weaker demand for polyethylene.
For more information about the PE market please refer to MRC Price reports.