* September ethylene CP expected to drop
* Holiday lull adding to bearishness
* Weak Chinese demand weighs on sentiment
Low density polyethylene spot prices fell Tuesday as expectations surrounding the ethylene contract price change next month turned bearish.
LDPE prices were assessed at Eur1,400/mt FD NWE ($1,545) Tuesday, down Eur50/mt day on day, and marking the first fall since August, in a market characterized by muted spot activity.
One ethylene buyer said this week that a fall similar to last month’s was expected for September, and this had filtered through to downstream purchasing.
The August CP for ethylene settled at Eur1,035/mt FD NWE, down Eur70/mt from July, falling for first time since February.
Flat downstream demand was also attributed to the holiday period, with one trader saying there was no buying appetite this month.
However, despite this, offers were not plummeting due to low inventories throughout the chain, he said.
Adding further pressure to prices was economic uncertainty in China. High density PE film was assessed at $1,185/mt CFR Far East Asia Wednesday, down $5/mt week on week.
The weaker yuan means Chinese petrochemical buyers have less purchasing power for imports and more incentive to buy domestic cargoes, sources said.
However, domestic cargoes in China were still more expensive on an import-parity basis than CFR China cargoes, mainly due to thinner liquidity and credit risks, with bankruptcies reported by many smaller trading firms, sources said.
China is the largest polymer market in Asia.
