Domestic prices for polyethylene (PE) in China may continue to decline amid weakening demand during the Lunar New Year, ICIS reports with reference to the words of market participants.

On February 6, spot prices for linear polyethylene (LLDPE) in eastern China were at CNY9,700 per tonne, which is CNY175 lower than in January.

Spot prices for high-density polyethylene (LDPE) were at CNY10,000 per tonne, also by CNY175 per tonne lower than in January.

Domestic prices for PE in China are declining since the end of January, as processors left on New Year holidays earlier this year, reducing to zero the trading activity on the market.

Moreover, heavy snowfall in central and eastern China last month led to the closure of several highways and the suspension of transport by rail, which forced coal producers and polymers in northwest China to stop deliveries.

In addition, logistics companies also started their New Year holidays earlier, as high oil prices increased transportation costs.

The daily total reserves of PE and PP at the manufacturers fluctuated approximately at the level of 700 thousand tons in recent times compared to about 600 thousand tons in November last year. The level of reserves is likely to grow in the near future.

As a result, suppliers were forced to lower their prices to reduce inventory.

So, on February 6, Sinopec and PetroChina offered linear polyethylene in eastern China at CNY9,950-9,800 per tonne, which is by CNY300-150 lower since January 30.

According to the DataScope of the company MRC, in December the total volume of PE production in Russia increased to 153.4 thousand tons, while a month earlier this indicator reached the level of 139.6 thousand tons. Russian manufacturers of polyethylene of low pressure (HDPE) have increased capacity utilization. In general, by the results of the previous year, the total amount of PE output reached the level of 1.7 million tons, which actually corresponds to the indicator a year earlier. The volumes of production of high-density polyethylene (LDPE) and linear polyethylene (LDL) increased, then the output of HDPE decreased.