Asia MLLDPE prices seen falling further in Oct on poor demand

Focus story by Jasmine Khoo

SINGAPORE (ICIS)–Asia’s metallocene linear low density polyethylene (MLLDPE) prices are expected to decline further in October as a result of ample supply and slow demand, market sources said on Thursday.

The demand for MLLDPE will come under further strain as the key market China is going to observe the Golden Week, or national day, holidays from 1-7 October, according to Chinese market players. Almost all market and business activity slows or comes to a close during the holiday period.

And this time around there were no signs of stocking up of inventories ahead of the holiday because of the poor downstream demand of stretch film, they added. In times of good demand, buyers stock up prior to going for holidays, just to ensure that they have enough material to use after the break.

“Most buyers are very cautious about building up inventories with the current poor market conditions,” a Chinese distributor said in Mandarin.

“Prices are definitely going to come down further; some other distributors and myself are going to talk with the supplier about adjusting spot prices going forward. Most of us [distributors] are faced with high inventory pressure, but buyers are not actively procuring,” he added.

Some market sources attributed the price decline to general bearish sentiment as a result of soft crude values, which have been on a 26-month low last week for a variety of reasons.

“The market is now very gloomy. Crude oil prices have been declining significantly in the past weeks. It is very difficult for us to expect upward movement in prices; we will be lucky if spot prices even hold steady,” another MLLDPE distributor based in China said.

In the southeast Asian market, distributors who export C6 MLLDPE cargoes to places such as Europe and Japan maintained that the gloomy macroeconomic conditions in these markets weighed on demand.

“Market is very slow now, most people are just waiting for new prices from suppliers. The prices would have to go down for October because supply is still ample and buying interest is weak.” a southeast Asia-based importer said.

Meanwhile, clearer price indications are expected to be available in the near future, when a regional energy major releases its offers for October-loading C6 MLLDPE cargoes, market players said.

Fresh offers would likely be available by next week, market sources said.

MLLDPE spot prices in key market China stood at an average of $1,805/tonne CFR (cost & freight) China on 8 January, before declining steadily to $1,730/tonne CFR China on 10 September.

Declines were also observed in the southeast Asia market, where prices slipped from $1,760/tonne CFR SE (southeast) Asia to $1,735/tonne CFR SE Asia during the same time period.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections