China PE, PP may extend gains in May on tight supply

Focus article by Angie Li

SINGAPORE (ICIS)–Spot import prices of polyethylene (PE) and polypropylene (PP) in China may remain on an uptrend on the back of tight supply amid a heavy plant maintenance schedule in May, industry sources said on Thursday.

Offers for imported linear low density polyethylene (LLDPE) film grade increased by $30/tonne this week to $1,330-1,360/tonne CFR (cost and freight) China, while imported PP flat yarn grade was sold at $1,280-1,340/tonne CFR China, also up by $30/tonne from last week.  

PE and PP prices have been steadily rising since February.

In the domestic Chinese market, major suppliers, namely, Dushanzi Petrochemical, Jilin Petrochemical, Wuhan Petrochemical, Shenhua Ningxia Coal Industry, Dalian West Pacific Petrochemical and Daqing Petrochemical will be shutting down their facilities next month. (Please see table below)

Supply of polyolefin imports is also expected to be limited as most Middle East sellers are preferring to ship out cargoes to the southeast Asian and Indian markets, where netbacks are higher, market sources said.

Plant shutdowns outside of China also make import availability of spot PE and PP scarce, they said.

In southeast Asia, PE facilities are either due for maintenance or are currently having production issues.

Petlin Sdn Bhd plans to shut down its 255,000 tonne/year low density polyethylene (LDPE) plant at Kerteh in Malaysia for about two weeks of maintenance from 10 May, while PTT Global Chemicals (PTTGC) is scheduled to take its 400,000 tonne/year LLDPE plant in Map Ta Phut, Thailand, for turnaround up to three weeks from end-May.

ExxonMobil in Singapore, meanwhile, is not expected to have any LLDPE material available until the end of May, according to market sources. It was not clear whether the company’s plants are shut.

Lotte Chem Titan, meanwhile, is running its 125,000 tonne/year LLDPE/high density PE (HDPE) swing plant in Merak, Indonesia, at half its capacity. The company, which could not purchase enough ethylene from the spot market to produce PE, has been receiving the feedstock HDPE material from its sister firm in Malaysia.

In the Middle East, Rabigh Refining and Petrochemical (Petro Rabigh) and SABIC were heard to be having production issues at some of their PE units since April, market sources said.

Meanwhile, supply of PP imports to China is also limited given shutdowns at plants operated by LG Chem and Samsung Total Petrochemicals in South Korea, and at a unit of Al-Waha Petrochemical in Saudi Arabia.

Additional reporting by Felita Widjaja

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