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Northeast Asian PE Margins Positive

China, Company Strategy, Economics, Japan, Polyolefins, South Korea, Taiwan, US
By John Richardson on 16-Jan-2013

NEA2.pngBy John Richardson

THE latest Northeast Asian high-density polyethylene (HDPE) chart from ICIS (see above) hardly suggests a tremendous increase in profitability, despite the improvement in sales volumes and sentiment in China that we first highlighted in December, and provided more details on last week.

At least the Northeast Asian producers have moved into slightly positive territory, though, and so they should probably be grateful for small mercies.

What might have limited their gains are reports that US PE producers shifted more export material in November and December in an effort to push through domestic January price increases.

We continue to worry that US PE capacity creep in 2013 might exert further pressure on the higher cost Northeast Asians as the year progresses, particularly, of course, if the China demand recovery proves to be short lived.

The overall increase in PE capacity, and also polypropylene (PP), capacity is another concern.