Balancing the Global Markets: LDPE, Desiccated Coconut

The Chinese government remains concerned over the effect of high inflation and instituted a series of interest rate rises at the start of the year. However, the impact of the global economic situation on Chinese growth has led to rates remaining stable since July. Similarly, requirements for reserve rates in Chinese banks were increased steadily from November 2010 but have been stable since June. China has continued its policy of gradually weakening the Yuan against the USD to encourage growth.

Ethylene prices dropped as the supply-demand balance again failed to find equilibrium. In Europe, the ethylene contract price for November was fully settled down around 20 Euros in October while US spot ethylene gained as the market flipped in November, seeing stronger demand.

LDPE supply and demand were balanced. Although many feedstock and polymer plants were in maintenance or operating at reduced rates, demand was also generally subdued. Some market segments saw a drop in demand but others appeared stable as stretch film and food packaging demand remained robust. Several distributors were reported to have had problems sourcing material, which may be due to producers holding stocks ahead of potential future price rises.

Desiccated coconut
Sri Lanka has demand and purchases fall away as buyers flee the market expecting greater price reductions and not needing to access the current stock. This has resulted in prices rapidly falling away last week as shippers search out for buyers.

- Nick Peksa, Mintec Ltd.

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