Asian prices soar as plastics exports are cut

19 September 1994 00:00  [Source: ICB]

TAIWAN'S MINISTRY of Economic Affairs has begun a month-long investigation into the anti-dumping duties imposed against Japanese and Korean PE buyers earlier this year. The review follows protests by Taiwan's polymer buyers who claim the duties are now totally inappropriate. A decision on whether the Taiwan government will lift the duties is expected mid-October.

The entire Far East polymer market situation has changed radically over the past months. Korea's policy of prolonged maintenance outages has cut back Korean supplies and the Far East no longer is the recipient of excess production from all over the globe. As a result, the region is now critically short of the whole range of commodity plastics and prices, which had been below world levels for some years, are now likely to lead world markets.

The need to bid material away from Europe and the US has lead to substantial hikes over the past weeks. PP and hdPE numbers are said to be rising by $10/tonne/day on the Hong Kong market and hdPE, PP and PS availability is so tight Asian prices are now forging ahead of European and even US levels.

PP and PE are in such short supply worldwide that Asian buyers are said to be on allocation from Japanese and Korean sources. Spot material is virtually unavailable with traders and distributors of Korean material claiming cuts in allocation of as much as 70%. Korean producers are now said to be talking ldPE prices around $900-950/tonne CFR Hong Kong for October delivery, and although customers are said to be unwilling to pay such high numbers with current prices still only around $750-780/tonne CFR Hong Kong, the total lack of export material from the US and Europe is a very strong bargaining tool which traders believe the Korean producer will play to maximum advantage.

PP offers from Korea for October are expected to be above $1000/tonne with prices in the market currently moving up towards these levels.

PS prices, officially $1000/tonne for September are moving up towards the $1100/tonne level c&f Hong Kong and Korea's October price is rumoured to be as high as $1200-1300/tonne CFR. Styrene numbers are said to have risen so sharply that in some cases PS producers have cut production and are trading the monomer. It is more lucrative. In Hong Kong a major distributor of Korean polystyrene has seen deliveries of August quantities delayed until late September, and September quantities cut by 50%.

There is a general perception that suppliers are withholding material in anticipation of rising prices and that to some extent the shortage situation is being exaggerated.

China is said by traders to have withdrawn from the Far East polymer markets over the past six weeks, having closed down converting plants rather than pay high polymer prices.

Traders say that neither US nor European polyolefins are available on Far East spot markets right now.

Quantum, the largest US PE producer, is the latest casualty of US ethylene shortages, declaring force majeure on ldPE deliveries from its LaPorte Texas site as a result of a cracker problem at Deer Park. The firm expects a reduction of 18 000 tonne of PE output over these weeks.

In Europe, the Priolo cracker outage has taken up to 20 000 tonne of PE out of the market and domestic polymer demand is well ahead of best expectations.

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