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China’s PE market down while Northeast Asian ethylene turns up

PE prices turned down in mid-November in China whereas spot ethylene prices have been firmer in Northeast Asia over the past two weeks. This is the fourth time this year that PE and ethylene have taken divergent paths,

The recent developments caused the gap between ethylene and HDPE to shrink to below $100/ton from approximately $200/ton recently. China’s import HDPE market has lost $44/ton on average in the past two weeks, The slump in the futures market as well as stumbling demand inside China paved the way for the weekly decreases in the PE market. Plus, the depreciation of the Chinese yuan against the US dollar caused buyers to hesitate further to engage in import deals.

Spot ethylene prices, on the other hand, surged by $60/ton in the same timeframe in Northeast Asia, triggered by the increasing demand from Chinese styrene buyers. Players are now wondering whether the recent losses of the energy complex will hinder this upward momentum in the north as the ethylene market in Southeast Asia has already been under pressure from overseas cargoes.

Indeed, spot ethylene prices in Northeast Asia were tracking an opposite direction to PE in October right after the week-long Chinese National Day holiday until mid-November, sustaining their downward cycle that kicked off in late August.

So far this year, spot ethylene prices have tracked a quite volatile trend, fluctuating in a wide range of more than $300/ton on average. Within these cycles, ethylene moved above import HDPE prices in China two times in the March-May period and August-September period.

The two markets have also taken different paths four times so far this year as can be seen from the graph prepared ,where you can run your own graphs to see the situation is mostly the same for LDPE and LLDPE.

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