FocusSpeculation grows of China PE price peak

29 February 2008 15:00  [Source: ICIS news]

By Chow Bee Lin

 

SINGAPORE (ICIS news)--Offers of US polyethylene (PE) exports to China at lower prices have raised speculation among importers that China PE values would peak in the short term, regional processors and traders said on Friday.

 

Offers of different PE grades for March shipment from the US were cited at $40-100/tonne below that from Asia and Middle East producers and this could potentially cap further price increases in China, they said.

 

Asian polypropylene (PP) prices had fallen in the past when large quantities of US material were offered to China and southeast Asia at lower prices, they added.

 

However, some regional producers said they believed US exports to Asia would ease the tight supply of certain film grade PE in the region and hence PE prices should stabilise after widening in range instead of falling sharply.

 

“The supply of film grade low density PE (LDPE) and linear low density PE (LLDPE) is still very tight in Asia, so I do not think regional suppliers would cut prices in the short term,” an international polyolefins producer said.

 

The price outlook was also uncertain because it was still not clear if the volume of US material offered to Asia would be sufficient to push regional prices down, a regional PE producer said.

 

US LDPE and LLDPE were heard offered at $0.73-0.74/lb and $0.62-0.64/Ib respectively on a FOB (free on board) Houston basis.

 

Based on these offers and estimated US-China freight rates of around $100/tonne, the cost of US exports on a CFR (cost and freight) China basis are pegged at around $1,717/tonne for LDPE and around $1,486 /tonne for LLDPE, according to global chemical market intelligence service ICIS pricing.

 

Traders’ offers of different PE film grades from the US were cited at $1,580/tonne for high density PE (HDPE), at $1,610-1,620/tonne for LLDPE and at $1,730/tonne for LDPE, all on a CFR China basis for March shipment.

 

US LLDPE grade was also heard offered at $1,590/tonne CFR China for March shipment but this could not be confirmed.

 

Offers of US HDPE blow moulding and injection grades were quoted at $1,520-1,550/tonne CFR China for March shipment.

 

For more on plastics see ICIS chemical intelligence

By: Chow Bee Lin
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