By Malini Hariharan
Asian polyolefin producers face a difficult time with markets being pulled in different directions. Feedstock costs have steadily moved up at a time when downstream demand and price direction remains uncertain.
These developments coupled with tight supply due to upcoming cracker turnarounds raised ethylene price expectations to around $1,350/tonne CFR Northeast Asia while propylene was stable $1,460/tonne CFR Northeast Asia respectively.
However, polyolefin markets in China did not keep pace. Burdened by weak demand and oversupply Chinese traders were looking at re-exporting polypropylene (PP) to southeast Asia, reports my colleague Bee Lin Chow. Yarn and injection moulding grades were on offer at $1,650/tonne CFR Indonesia from China, about $50-90/tonne lower than offers from other sources in Southeast Asia.
In polyethylene (PE), the key linear low density PE (LLDPE) futures contract on the Dalian Commodity Exchange dropped 1.6% yesterday on profit taking. Traders were said to be locking their profits by taking a sell position on the Dalian.
Indian demand was also lacklustre as buyers were unsure of price direction, said one local industry source. The sharp rise in oil prices had not resulted in a spurt in buying as many players viewed this as a temporary situation which would be corrected with an easing of the Middle East crisis, he added.
In addition to this, moves by various Indian states to restrict the use of plastics bags also dampened sentiment. The Delhi government was said to be considering closing down over 400 plastic-bag manufacturing units to ensure effective implementation of its 2009 ban on use of these bags.
The country’s Supreme Court also confirmed last week a ban on sale of tobacco products in plastic pouches from 1 March. This segment was estimated to consume over 50,000 tonnes of PE.
A second source pointed out that trading had been hit by the wide difference between international and domestic prices. Local producers have pegged PE prices below import parity levels for the last few months to restrict import volumes into the country. “Fundamental demand is not bad; but the price delta is so high that traders are not risking imports,” he added.