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Updated to Q4 2020
China production volumes in Q4 increased, but import supply tightened. There were more shipment delays for Iranian cargoes to China, while US cargoes were absent through Q4. SE Asia supply was generally tight because of delayed shipments amid container shortages and lack of vessel space. LDPE was particularly short due to maintenance shutdowns and better netbacks for other products.
China domestic demand improved in Q4, mostly as downstream production required packaging, agricultural film and pipe grades, especially in October. Year-end demand also supported the market. SE Asia demand remained generally stable, as the region continued to struggle to contain the impact of the coronavirus on economic growth.
PE supply in Q4 2020 tightened considerably as the quarter progressed. Cracker and PE production issues affected supply, with LDPE in particular tightening. LLDPE and high density polyethylene (HDPE) saw lower imports, as netbacks were better in other regions. European spot prices have been rising, but they had been low in global terms for months, leading to some complacency from buyers. By the end of the year most grades had tightened.
PE demand was sustained throughout Q4, supported by a lack of supply, as exports rose and imports fell, but it was only towards the end of the quarter that it really picked up, when there was the possibility of the lack of supply in some grades. Sustained cracker and PE production issues affected supply, and the complacency that led to low stocks with buyers changed to desperate spot buying of low density polyethylene (LDPE) in particular by December.
Attractive pricing in Asia drew large volumes to that region, at the expense of Turkey and other countries. Suppliers have cut allocations or removed offers entirely. This reached a tipping point in December, when prices spiked on limited availability. Certain sellers have also been unable to offer due to the global shortage of shipping containers or been priced out by significant increases to freight prices.
Demand improved throughout Q4 but jumped in December as prices shot up. Interest has been high in low density polyethylene, as main supplier Petkim looked to export material to the lucrative Asian market. Linear low density polyethylene was sufficiently available and high density polyethylene wavered between tight to balanced.
PE supply remained tight in most countries during Q4 amid reduced export availability from the US following hurricane impacts and shutdown of Braskem Idesa’s Ethylene XXI complex in Mexico. Braskem’s increased utilisation rates in Brazil support improved supply locally and allowed exports to resume. Reduced container availability and freight cost increases limited imports to the region.
Demand for PE in Q4 remained strong on packaging needs for essential goods and was further supported by resuming industrial activity and durable goods demand in major regional markets. Domestic demand in Mexico shifted reliance from local production to imports amid production shutdown.
Q4 supply was restricted by the absence of US-origin exports across global markets. Supply disruptions in the US because of back-to-back hurricanes hampered PE exports to markets worldwide. This absence of US-origin PE across Asia kept the spotlight on Middle Eastern and Indian PE exports, limiting seller allocations to respective markets. A shortage in containers’ availability had a bearing on spot volumes traded. Firmer netbacks realised by suppliers further curbed allocations to the Middle East.
Q4 PE demand improved as countries attempted to return to pre-pandemic trade levels and following a post-pandemic recovery in uptake in major demand sectors. Food packaging demand stayed strong, although some segments saw a slight dip from the robust uptake in the lockdown months. Demand for household and consumer goods previously considered non-essentials saw a gradual recovery. Buying sentiment and uptake was boosted by tight supply, as buyers looked to stock up.
Availability steadily reduced through the fourth quarter of 2020. Suppliers from all origins preferred Asia and cut allocations to Africa. US sellers pulled out almost entirely, leaving Middle East producers in a strong position. Even they cut their allocations, re-directing some of that material to China and nearby nations. The global shortage of containers has also restricted offers from some suppliers, who are unable to get their products on ships.
Demand was slow overall but varies country to country, as recoveries from lockdown measures vary. Egypt and South Africa emerged as the strongest in terms of polymer demand, with South Africa in particular seeing healthy demand at the end of the year. Demand in other countries was sluggish, with those reliant on crude oil sales and tourism struggling to regain their previous stature.
Supply improved through the first part Q4 before tightening again in its final weeks. At the outset, supply levels started to ease as hurricane-impacted plant shutdowns were mostly resolved, while two new low density polyethylene (LDPE) plants started up. Towards the year-end, stronger overseas demand driven by a major outage in Mexico, and logistics disruptions in other regions drew down stocks.
Domestic demand remained strong, persisting through the traditional slow season during November and December. Strength in demand has mostly been driven by consumer non-durable applications such as food packaging. Overseas, a major outage in Mexico near the end Q4 caused increased sales to Mexico, while logistics disruptions to other key export destinations also created an additional pull on demand.
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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