Polymer trends: Demand dips ahead of China break

05 October 2005 11:14  [Source: ACN]

HdPE: Producers increased their exports to Europe and South America, as their attempts to raise offers on the back of high ethylene costs and strong demand faced customer resistance in China (see page 24). One producer said it was seeking a US$40/tonne increase in October over its September prices. Also, demand was rather weak in China last week ahead of the country’s National Day holiday this week.

Prices were at US$1100/tonne cfr China for injection-grade hdPE, and US$1090/tonne cfr China for film-grade, the same level as in August. SEA prices were tracking Chinese prices, an SEA producer said.

LldPE: Prices increased by US$20-30/tonne from August, to US$1110/tonne cfr SEA/China. However, lacklustre demand from China was stalling producers’ efforts to raise prices. But an SEA producer said it was confident it could achieve a US$40/tonne price increase for October, as demand would be more robust once Chinese customers returned to the market after the week-long holiday.

Some producers were looking to step up exports to Europe, owing to a sharp increase in prices there. But a couple of them said they would prefer to look to China for exports, as any arbitrage opportunities with Europe would be temporary.

PP: Prices rose by US$20-30/tonne from August on strong demand and rising propylene costs. However, attempts by producers to raise offers for October were facing resistance, forcing them to export to Europe, where prices were much higher.

One producer said its offers of US$1220/tonne cfr China/SEA for film-grade PP, which were US$50/tonne below September prices, saw no response from buyers. Offers for injection-grade material at US$1190/tonne cfr China/SEA drew bids of US$1150-1160/tonne cfr China/SEA.

Prices of injection-grade PP were unchanged at US$1140/tonne cfr China/SEA and copolymer prices at US$1210/tonne cfr China/SEA were US$10-30/tonne higher than in August.

PS: Producers and distributors managed to achieve modest prices increases, owing to healthy demand from manufacturers of household appliances.

According to a Chinese trader, demand for general-purpose PS (GPPS) was much stronger than that for high-impact PS (HIPS).

The trader attributed the decline in demand for HIPS to the weak performance of the Chinese re-export sector.

‘The dismal performance of the re-export sector had resulted in a situation where HIPS prices were unable to respond to increases in the cost of styrene. In fact, as styrene costs increased, HIPS prices fell,’ said the trader.

Prices of GPPS rose by US$10-40/tonne from prices in September to US$1170-1200/tonne cfr China/Hong Kong. In the Chinese domestic market, prices were up by Rmb100/tonne to Rmb11 500-11 700/tonne ex-works.

HIPS prices, however, dipped by US$10-30/tonne to US$1200-1250/tonne cfr China/ Hong Kong. Prices in the Chinese domestic market also edged down by Rmb100-200/tonne to Rmb11 800-12 100/tonne ex-works.

ABS: Prices remained firm on the back of high acrylonitrile, butadiene, and styrene costs. Demand was, however, declining, as end-users found it difficult to absorb or pass on the high costs.

‘We have been selling less material, especially to the smaller Chinese converters who were finding it very difficult to pass on the costs,’ said a major distributor.

Sales were expected to remain slow after China’s week-long National Day holiday. According to a Chinese trader, end-users in China had built up their inventories in September and most of the major end-users were holding enough stock to last them until mid-October.

Intense margin pressures had resulted in most major NEA producers keeping operating rates at an average of 60-70%.

Prices remained firm at US$1490-1510/tonne cfr China/Hong Kong, unchanged from September.

In the Chinese domestic market, parcels of Chinese origin were transacted at the same level as the previous month at Rmb15 100-15 300/tonne ex-works. Imported material prices were unchanged at Rmb15 500-15 700/tonne delivered.

Prices in SEA edged up by US$20-40/tonne to US$1480-1500/tonne cfr SEA. According to a major producer, demand was relatively sluggish, with most enquiries centring on small to medium-sized lots.

PVC: Prices continued gathering strength on the back of increasing vinyl chloride monomer costs and relatively strong demand.

Supply in SEA and NEA was also limited owing to several plant outages and scheduled turnarounds.

A Taiwanese major concluded its October settlements at US$840-850/tonne cfr China/Hong Kong, US$60-70/tonne higher than its September settlements.

Most of the major Japanese producers had sold a few October parcels at US$850/tonne cfr China/ Hong Kong, US$50-60/tonne up from September business. The price was, however, US$50-60/tonne lower than their initial offers of US$900-910/tonne cfr China/Hong Kong.

According to a NEA trader, the Japanese majors were forced to lower their offers owing to strong buyer resistance.

Meanwhile, a South Korean producer said it was not offering to the Chinese market in October as it was concentrating on other markets such as India, Turkey, and Egypt, which promised higher prices.

Its October settlements were up by US$50-60/tonne at US$910/tonne cfr India.

Prices in the Chinese domestic market retreated slightly as buying slowed owing to China’s week-long National Day holiday. Prices of ethylene-based PVC declined by Rmb200-600/tonne to Rmb7100-7300/tonne ex-works, while carbide-based PVC fell by Rmb600-700/tonne to Rmb6650-6900/tonne ex-works.

Prices in SEA were hovering around US$800-820/tonne cfr SEA, unchanged from a month earlier.

Producers said prices were likely to hold firm above US$800/tonne throughout October on the back of high VCM costs.

BULK POLYMER PRICES, US$/tonne

EXPORTS TO EUROPE, SOUTH AMERICA SURGE

LdPE: South Korean producers were stepping up their exports to Europe and South America, as fob prices to these destinations were at least US$100/tonne higher than those to China. Also, demand in South America had increased sharply owing to a dwindling of imports from the US because of shortages in the US caused by hurricanes Katrina and Rita. Prices in Europe were also on the rise owing to strong demand. Prices to South America were at US$1150-1200/tonne fob Korea. Prices in Europe were at US$1400/tonne cfr NWE (see page 24).?An SEA producer had raised offers by US$40/tonne to US$1180/tonne cfr China/SEA, but buyers said they would be unable to pass on the higher costs to end users. Prices for September were unchanged from August.

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