FocusChina LDPE may rise as supply tightens on Thai plant shutdown

17 July 2013 09:51  [Source: ICIS news]

By Chow Bee Lin

PTT facility in Mab Ta PhutSINGAPORE (ICIS)--China’s linear low density polyethylene (LDPE) import prices may rise in the coming weeks on tighter supply caused by the outage of a 300,000 tonne/year plant in Thailand, industry sources said on Wednesday.

Asian and Middle East LDPE cargoes are being offered at $1,460-1,485/tonne (€1,110-1,129/tonne) CFR (cost and freight) China this week, up by $10-20/tonne from last week, market sources said.

On 12 July, the average China weekly LDPE import prices were assessed at $1,440-1,475/tonne CFR China, $5-15/tonne higher from the previous week, according to ICIS.

The shut LDPE plant in Thailand is operated by PTT Global Chemical (PTTGC). The unit was taken off line last week because of mechanical problems and is expected to be down for three months.

China’s supply of LDPE from overseas has tightened since April, with less Iranian cargoes being shipped out to the northeast Asian country, Chinese traders said.

Iran is the top LDPE exporter to China since 2010. The Middle Eastern country accounted for  25% of China’s LDPE imports in the first half of 2013, with a full-year 2012 share of 27%, official data showed.

Thailand, on the other hand, has a 6.3% share in China’s LDPE imports in January-June 2013. Last year, Thai LDPE accounted for 6.4% of China’s overall imports of the polymer.

Compared with previous corresponding periods, Thailand’s LDPE exports to China in the first half of this year and in 2012 were up by 59.6% and 67.7%, respectively, China Customs data showed.

South Korea, Saudi Arabia and Qatar are also among the major LDPE exporters to China.

Any further increase in China’s LDPE import prices, however, might be moderated by continued weakness in downstream demand, Chinese traders said.

“The import prices have been rising because of the tight supply. Many Chinese buyers are likely to resist any further price hikes,” a Chinese trader said.

In the four weeks ended 12 July, LDPE import prices in China rose by $20/tonne, according to ICIS.

Most of the recent LDPE price hikes were driven by rising costs of feedstock ethylene,  and not by improving downstream demand, another Chinese trader said.

Any upward price pressure may not last because Iran’s LDPE export supply may increase in the coming weeks, a third Chinese trader said.

($1 = €0.76)

Additional reporting by Angie Li

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Chow Bee Lin
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