Price and market trends: Vietnam PE demand stays weak amid school holiday, rainy season

23 June 2014 00:00 Source:ICIS Chemical Business

Vietnam’s consumption of polyethylene (PE) resins has been lacklustre in recent weeks amid the school holiday and rainy season, traders said on 11 June.

Demand for shopping bags and food wrappers typically weaken during school holidays, while the rainy season, which lasts from May to September in Vietnam, poses problems in delivering resins to factories, they said.

Low density polyethylene (LDPE), linear low density polyethylene (LLDPE) and high density polyethylene (HDPE) are the most common grades of plastics used in the country.

Vietnam PE

The country’s imports of LDPE has been softening as traders are holding long supply of the polymer, market sources said.

A few importers have halted their LDPE purchases since last month due to sufficient stocks and lingering weakness in downstream demand.

On 6 June, spot LDPE prices in the domestic Vietnamese market were unchanged at dong (D) 37,500-39,000/kg ($1.77-1.84/kg), with limited transactions heard during the week. LLDPE prices were also stable at D37,200-37,900/kg, while HDPE prices were unchanged at D37,000-37,600/kg.

Meanwhile, Vietnam’s PE resins imports this year are expected to either be flat or show a minimal increase from 2013, according to a Singapore-based cargo trader.

“This is amid generally unchanged supply-demand fundamentals during the first half of the year,” the trader said. “If we would see a pick up, it would only be around 5% and that would be towards the year-end or nearing Christmas holidays when PE consumption typically rise,” he said.

This year will be in stark contrast with the strong increase in PE imports recorded in 2013, the trader said. “Last year, particularly in the second half, Japanese end-users were ordering huge volumes of finished products from Vietnamese converters,” according to the trader.

In 2013, the trader recorded an increase of around 25-30% in its Vietnam-bound PE import cargoes.

“This was due to the territorial dispute between Japan and China which prompted a number of Japanese businesses to shift its orders to Vietnam,” he said. “A number of my clients who are converters ramped up their production rate by almost threefold to cater to the strong demand from Japan last year.” But this is unlikely to be replicated this year, he said.

“Japanese buyers are ordering the usual amount of goods and capacity of the local Vietnamese converters have somehow (caught) up,” the trader said.

By Arianne Perez