SE Asia polyols uptake in May likely to stay soft on tepid demand; pandemic fallout

SINGAPORE (ICIS)–Southeast Asia’s polyether polyols spot demand in May is expected to decline as a result of lower sales in the Muslim fasting month of Ramadan as well as extended lockdowns in various parts of the region to curb the coronavirus pandemic.

Almost a week long Labour Day holiday in China is also likely to result in subdued trade.

The sudden upheavals in upstream crude futures seen in March and April also contributed to dampened market confidence in polyether polyols market.

Furthermore, since 31 March this year, a number of US-based mattress makers filed antidumping (AD) and countervailing duty (CVD) petitions against mattresses from Cambodia, Indonesia, Malaysia, Serbia, Thailand, and Vietnam, on the alleged grounds of these products being sold at less than fair commercial value.

According to some market players, investigations are underway.

With these ongoing factors dampening the market sentiment, spot discussions for May-loading cargoes were sluggish, both buyers and sellers said.

“Most buyers are not keen to commit to spot sales for certain grades such as flexible foam polyols now, as finished goods demand from Europe and the US remains slow,” a northeast Asian trader said.

A China-based polyols producer said it was holding back on offers for May shipment products, as enquiries were very limited.

“For now, we will focus more on the Chinese local market where demand is stronger,” the producer said.

On the supply front, the postponement of some scheduled shutdown maintenance projects for upstream products such as propylene oxide (PO) and propylene in the region meant that supply of polyols could potentially stay high.

The postponement of turnaround at these upstream plants was also partly due to lack of manpower required to carry out the maintenance amid the lockdowns in parts of southeast Asia.

“Currently, with lockdowns and movement control taking place all over the region, it is inevitable that cargo uptake is slow. The unpredictability of the upstream markets is also quite worrying. I personally am buying on a need-to basis in order to prevent any potential losses,” a southeast Asia-based buyer said.

According to ICIS data, prices fell in the period from 4 March to 22 April from an average of $1,430/tonne CFR SE Asia to $1,300/tonne CFR SE Asia.

Spot discussions for May remained ongoing, though deals were understood to be scarce, sources added.

Focus article by Jasmine Khoo