Asia/Mid East PE, PP producers seek $50/tonne rise

23 May 2007 08:36  [Source: ICIS news]

GUANGZHOU (ICIS news)--Asian polyethylene (PE) and polypropylene (PP) manufacturers are looking to raise prices by up to $50/tonne above May transaction levels to $1,300/tonne, citing record high naphtha and crude prices as the main factors, Middle East and Asian producers said on Wednesday.

 

Some manufacturers looked to offer low density PE (LDPE) at $1,400/tonne CFR (cost and freight) China and Southeast Asia (SE Asia), up to $1,350/tonne CFR China/SE Asia for film grade high density PE (HDPE) and up to $1,300/tonne CFR China/SE Asia for injection and yarn grade PP, the producers said on the sidelines of the Chinaplas rubber and plastics fair in Guangzhou.

 

Some producers said the surge in upstream crude and naphtha prices had boosted market sentiment but it is still unclear if the positive mood will translate to actual price increases for all grades.

 

Sellers of linear low density PE (LLDPE) and blow moulding grade HDPE, in particular, are unwilling to be overly positive yet as import interest for this grade has been weak, especially in the key China market.

 

“China demand is very weak now. [Producers] can try selling higher but we are not sure if buyers will accept,” a Middle East producer said, referring to LLDPE.

 

“China’s import demand, especially that for blow moulding grade HDPE, has been weak since the fourth quarter last year, due to the availability of lower priced local material,” an international producer said.

 

Buying ideas for blow moulding grade HDPE in China are currently no higher than $1,280/tonne CFR China, he added, estimating that close to 1m tonnes of HDPE capacity were added in China last year.

 

Many Middle East and Asian producers and their customers were discussing June prices in Guangzhou this week at the fair due to end on Thursday and were expected to announce their offers next week, the producers said.

 

July Brent futures were trading above $70/bbl on Tuesday on the Intercontinental Exchange, the highest levels since September 2006, due to a combination of concerns over tight US gasoline supplies, a rise in violence in Nigeria and the standoff between the West and Iran over Tehran’s nuclear programme.

 

Asia’s open spec naphtha prices also rose on Tuesday on the back of crude gains. The contract for the first half of July was up by $4-5/tonne at $736-737/tonne, CFR Japan, while the contract for the second half of July was also higher at $732-734/tonne in backwardation.

By: Chow Bee Lin
+65 6780 4359

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