By Malini Hariharan
Polyolefins prices in the key China markets inched up last week thanks to an uptick in buying activity.
Prices of high-density polyethylene (HDPE) blow moulding and film grades moved up $20/tonne while linear-low density PE prices were up $30/tonne, reports ICIS pricing. Polypropylene prices were also up $10-20/tonne
However, opinion continues to remain divided on future market prospects. Some players are confident that the upturn in China will boost sentiment and buying across other markets in Asia and the also the Middle East. They also believe that increased production in the Middle East will be more than compensated by turnarounds and operating rate cuts in Asia which should tighten inventories. PP prices, for instance, are expected to move up further in the coming weeks because of limited availability from China, Japan and South Korea.
But not everyone is convinced given the Eurozone debt crisis. Falling prices in the Europe and the US are also likely to spur exports into Asia. In the US, PE contract prices for October have fallen by 5 cents/lb ($110/tonne).
There is already concern of downward pressure on LDPE and LLDPE as a result of increased offers from Europe.
Support from feedstocks also appears uncertain. Propylene prices inched up last week but there was no consensus of further upward movement. Ethylene prices continue to fall in Northeast Asia with the fob Korea hovering at around the $1000/tonne level.
It’s a chicken and egg situation, with ethylene market players looking at derivative markets to point to future price direction while PE players are hoping that cracker operating rate cuts will push up ethylene and PE prices.