APIC ’18: SE Asia PE under pressure; US cargoes inundate Vietnam

KUALA LUMPUR (ICIS)–Southeast Asia’s polyethylene (PE) import prices were largely under pressure in the week amid additional volumes from displaced US cargoes in the region, which are likely to lengthen the market further, particularly in Vietnam.

Availability of competitively priced US cargoes had widened the price gap for PE grades affected by the 25% China’s tariffs in the region.

Several regional and Chinese traders were actively trying to offload US-origin high density PE (HDPE) film, HDPE injection and linear low density PE (LLDPE) film grades, to southeast Asia.

Vietnam is the main target market due to its close proximity to China and duty free market.

“Chinese traders mostly try to sell to Vietnam as they might not have the flexibility and connection to sell their cargoes to other southeast Asian markets,” said a local trader.

Thus, additional supply of both prime and off-grades US-origin cargoes were particularly rife in Vietnam which weighed down on market sentiment.

Off-grade HDPE injection cargoes were sold at $1,050-1,100/tonne CFR (cost & freight) Vietnam which were much lower prices as compared to its prime grade counterparts that were previously sold at around $1,200/tonne CFR Vietnam.

“The much lower prices heard in the market are usually for off-grade cargoes and cannot be considered market prices,” said a regional trader.

Several deals for US-origin linear low density polyethylene (LLDPE) film cargoes were concluded at $1,090/tonne CFR SEA while offers stand at $1,100/tonne CFR SEA.

A couple of deals for US-origin high density polyethylene (HDPE) film cargoes were concluded as low as $1,270/tonne CFR SE Asia.

“Some of the cargoes are already on water so buyers will try to push down the price as much as possible because they know that the suppliers are under pressure to sell,” said a Vietnamese trader.

Most market participants reckoned that the reshuffling of displaced US cargoes might temporarily lengthen the supply in the region.

In terms of demand, there was thin buying interest for US-origin cargoes that require longer shipment period amid market uncertainty.

Depreciation of local Asian currencies against the US Dollars had curbed demand for most import cargoes, leading to subdued price discussion.

However, restocking activity is expected to resume after regular suppliers announced their offers for September shipment later in the month.

The raging US-China trade spat is also impacting the chemicals market in the region.

The shifting trade flows will be one of the main discussions participants of the Asia Petrochemical Industry Conference (APIC) 2018 – being held in the Malaysian capital on 20-21 August – will be holding with each other.

Focus article by Felita Widjaja