FocusChina PE might peak on buy-sell gap

25 June 2008 05:39  [Source: ICIS news]

By Chow Bee Lin

SINGAPORE (ICIS news)--Polyethylene (PE) prices in China might peak as the buy-sell price gap widens with suppliers seeking further price hikes for July shipment, regional producers and traders said on Wednesday.

Import interest has waned on weak sentiment caused by a sharp fall in domestic prices.

Key Middle East and Asian producers announced offers for July shipment at $1,790-1,820/tonne CFR (cost and freight) China for film grade high density PE (HDPE), and at $1,820-1,850/tonne for linear low density PE (LLDPE), the producers and traders said.

However, buying ideas were at $1,750/tonne and lower for film grade HDPE and below $1,800/tonne for LLDPE, which meant the buy-sell ideas were up to $100/tonne apart, traders and plastics processors said.

Chinese petrochemical major PetroChina cut PE prices by yuan (CNY) 300-1,150/tonne ($44-167/tonne) early this week due to strong buyer resistance, local traders said.

The sharp fall in the China domestic prices dampened market sentiment and hence import interest.

Chinese processors’ resin import demand had weakened also because of reduced export orders from the US, a north China-based trader said.

“China’s plastic product export has lost its competitive advantage as resin prices are much higher or similar in China compared with that in the US,” he said.

Despite the gap in buy-sell price ideas, some producers said they were determined to push for the higher values due to tight supply and high naphtha costs.

“Demand has slowed down due to the recent price hikes but our customers would have to pay higher prices for LLDPE because our supply of this grade is tight,” a Middle East producer said.

“We have to raise our prices at least $20-30/tonne for July because naphtha prices have risen by so much,” a South Korean PE producer said.

Key PE exporters to China include Formosa Plastics in Taiwan, Honam Petrochemical and Daelim Industrial in South Korea, and PTT Chemical and Siam Cement Group in Thailand.

($1 = CNY6.87)

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By: Chow Bee Lin
+65 6780 4359

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