FocusMiddle East LDPE cargoes head to China to chase higher prices

01 November 2013 05:10  [Source: ICIS news]

By Muhamad Fadhil

Middle East LDPE cargoes head to China to chase higher pricesSINGAPORE (ICIS)--Availability of low density polyethylene (LDPE) in the Middle East has been tightening as regional producers are allocating more volumes to China, where prices of the polymer are higher, market sources said on Friday.

On 25 October, LDPE prices in China were assessed at $1,610-1,650/tonne (€1,191-1,221/tonne) CFR (cost and freight) China, while Middle East prices were assessed at $1,530-1,570/tonne CFR GCC, according to ICIS data.
“Middle East producers prefer to sell into China because of better demand and margins,” said a Dubai-based trader.

Demand from China is expected to pick up as end-users will likely stock up ahead of two major holidays – Christmas in end-December and the Lunar New Year in early 2014.

On 12 October, LDPE import prices in China increased to their highest level in more than two years at $1,630/tonne CFR China because of tight supply, market sources said.

“Expect LDPE supply [in the Middle East] to remain tight from now to mid-February,” a second Dubai-based trader said.

Polyethylene (PE) demand in the Middle East is stable-to-soft after the Eid-ul-Adha holiday, which marked the end of the annual Muslim pilgrimage to Mecca, in mid-October.

However, Middle East producers are quoting firmer LDPE prices for November at the high-$1,500/tonne levels, to narrow the spread between Chinese and Middle Eastern offers.

In Asia, LDPE supply is expected to slightly improve following completion of maintenance at a Chinese plant, but other plants in southeast Asia are either shut or not running at full capacity.

Lanzhou Petrochemical restarted its 200,000 tonne/year LDPE plant in China’s Gansu province late last week after an outage caused by technical problems.

In Thailand, PTT Global Chemical (PTTGC) is running its 300,000 tonne/year LDPE plant at Map Ta Phut at 70-80% of capacity, since restarting the plant in mid-October after more than two months of shutdown.

In Malaysia, Petlin’s 255,000 tonne/year plant is still down for turnaround since September, with no clear date on when it will resume production.

($1 = €0.74)

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

By: Muhamad Fadhil
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