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Updated to Q2 2021
Supply in China decreased in Q2 on domestic scheduled annual maintenance and reduced imports. In southeast Asia, supply also remained under pressure because US winter storm-related plant outages had yet to fully resume. Middle Eastern and regional southeast Asian supply was sufficient to meet the sluggish demand and prices came under heavy pressure in April/May before recovering in early June.
Demand slightly dropped in Q2 2021 in China due to poor profit margins among plastic manufacturers and also due to skyrocketing prices amid the reduced supply from the US. Packaging demand in China and southeast Asia turned out to be weaker than anticipated as southeast Asia also grappled with the persistent threat of COVID-19 affecting growth and economic activities.
Supply was very much grade driven in Q2. LDPE has remained tight, as well as higher alpha-olefin LLDPE, including metallocene LLDPE, where imports and local supply issues were common. HDPE was widely considered the weakest grade by the end of the quarter and was the only grade that saw contracted prices slipping. Spot supply for most grades eased, and imports were widely expected.
Demand in Q2 was mixed, depending often on the supply available. Smaller buyers tended to slow down buying as they expected prices to begin to slide, and bought one truck less rather than one truck more, as they had done when prices were soaring. Larger buyers have continued to buy as normal. Packaging and construction sectors are expected to remain healthy.
Supply improved through Q2 as weak demand in many major import reliant countries left sellers pushing for sales. India, China and Turkey itself all saw demand fall away for various reasons and previously tight supply lengthened. Various production interruptions were also ended.
Demand levels were stuck in the doldrums in tQ2. The Turkish Plastics Federation called for its members to avoid all purchases, in an effort to counter historic high prices. Although some of this is likely down to demand destruction, there was indeed a sustained fall in buying interest around the time this announcement was made.
Latin America PE supply in Q2 remained tight in Mexico as producers faced several plant issues, despite Braskem Idesa resuming operations both local producers continue facing limited feedstock availability. Supply in Brazil has improved as material deliveries from Braskem normalised as the producer lowered utilisation rates from 87% but are still above normal around 80%. Export availability from the US remains tight following the polar storm but is improving. HDPE supply was very tight.
Regional demand for PE in Q2 remained above historically normal levels amid strong packaging demand for essential goods. Legislation prohibiting single-use plastics are returning for some cities, states, and countries. Industrial activity in Brazil, Mexico and Argentina has flattened and low GDP projections are limiting demand upside, especially for injection grades.
Availability improved significantly in Q2 and was sufficient through the quarter. As facilities in the US resumed operations after disruptions due to the polar storm, demand for Middle Eastern imports in the US and Latin America fell, freeing up volumes for other markets, including those in the GCC. The completion of maintenance at key Middle Eastern facilities in Q1 also contributed to improved supply from regional producers.
Trading activity in the region dipped early in the quarter with the onset of Ramadan in mid-April. There was some uptick in buying activity for restocking after the Eid ul-Fitr holidays, but the overall declining trend in prices amid improved availability capped bulk purchasing, as buyers kept to need-based buying and avoided building stocks. The absence of any significant demand increase in Asia, a major driver market, further weighed on volumes booked.
Availability improved through Q2 as production issues eased and faltering demand in many big importing nations eased tightness. Historic high prices in April opened new supply streams, with Chinese material becoming competitive, despite long delivery times. Collapsing demand in Turkey, India and China left a surplus of material toward the end of the quarter.
The start of the quarter saw demand by eroded by never-before-seen high pricing. Africa entered a seasonal low period in June. This was exacerbated in west Africa by a drought, which limited energy production at hydroelectric powerstations in Ivory Coast and Ghana. These two nations provide power to many neighbouring countries. Power was limited to only a few days a week and massively reduced demand from many converters.
Supplies loosened following the severe supply disruptions seen in Q1, although supplies remained short relative to market demand. Supplies were particularly tight for HDPE injection and blow-moulding grades, while LDPE and LLDPE C6 supplies were also restricted. Participants throughout the industry spent much of the quarter struggling to rebuild inventories ahead of the Atlantic hurricane season.
Domestic demand remained healthy through Q2 on expanding manufacturing activity and persistent strength in demand for PE packaging, stemming from pandemic-induced shifts in consumer behaviour. Export demand slowed as high prices for US product relative to material from other regions narrowed arbitrage opportunities, while supply constraints caused producers to curtail their export allocations.
ICIS publishes pricing reports for key polyethylene grades and offers timely and in-depth market data, including price assessments, trade activity, feedstock supply and analysis of each region’s current and upcoming export availability.
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Key trading prices and activities – Import, export, domestic prices. Offers, bids, transactions
Price alerts and market updates: Shifts in prices, latest news on the PE market developments and changes to regulations and demand trends
Plant data: Production and capacity, plant maintenance and shutdowns
Feedstock: Prices and market updates for feedstocks – crude, ethane and ethylene
Historical prices: Download and/or chart pricing from as far back as the start of ICIS coverage
Weekly market outlook: Overview and outlook for the overall PE market, including a brief commentary on the other regional markets
Supply and demand: Analysis of domestic and international supply and demand
Regional coverage: Africa, Asia-Pacific, China, CIS, Europe, Latin America, Middle East/South Asia, Turkey, US
Middle East/South Asia:
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