SE Asia PE seen stable; cautious buyers stay on sidelines

Focus story by Arianne Perez

SINGAPORE (ICIS)–Spot polyethylene prices in southeast Asia for August loading are expected to remain stable as most buyers are wary of procuring cargoes amid continued lukewarm demand from downstream markets, industry sources said on Thursday.

Producers are not in a rush to sell material amid a general tightness in supply, while buyers are adopting a cautious stance.

On 8 August, prices were assessed stable week on week at an average of $1,580-1,600/tonne CFR (cost and freight) SE (southeast) Asia for dutiable low density polyethylene (LDPE) resins, and at $1,620-1,640/tonne CFR SE Asia for non-dutiable LDPE, according to ICIS data.

Linear low density polyethylene (LLDPE) prices, meanwhile, stood at $1,590-1,605/tonne CFR SE Asia for dutiable cargoes – reflecting a slight rise of $5/tonne at the high end of the range – while prices for non-dutiable parcels were steady at $1,620-1,640/tonne CFR SE Asia over the same period, ICIS data showed.

High density polyethylene (HDPE) cargoes were assessed at $1,590-1,600/tonne CFR SE Asia for dutiable cargoes and at $1,625-1,640/tonne CFR SE Asia for non-dutiable cargoes, both unchanged from the previous week.

Buying sentiment is expected to remain soft this week, as expected restocking activities failed to materialise last week, a regional trader said..

“This could be blamed on poor downstream demand. I heard some Vietnamese plastic converters have received very limited orders from their downstream clients in Europe,” the trader said.

In Thailand, the limited ability of converters to sell their finished products prompted some of them to reduce production by around 20%, another trader said.

“Inventories of finished products are still quite high in the factories so they [converters] would have to slow down production and are not purchasing of more resins,” he said.

Political uncertainty is weighing on PE demand in Thailand, market sources said.

“Although the ongoing martial law has brought peace and order, buying sentiment is still cautious,” the second trader said.

In Indonesia, buying appetite is tepid as most buyers are still awaiting a clearer price direction after the Eid-ul-Fitr holiday, market sources said.

The holiday marks the end of the Muslim fasting month of Ramadan that is observed in predominantly Muslim country of Indonesia.

In Malaysia, PE buyers are opting for a hand-to-mouth consumption.

“Not a lot of buyers are keen to stock up huge inventories amid high offer prices and weak downstream demand,” a Malaysia-based market participant said.

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