SE Asia PE seen stable-to-soft on thin demand, weak China market

31 October 2017 03:23 Source:ICIS News

SINGAPORE (ICIS)--Spot polyethylene (PE) prices in southeast (SE) Asia are expected to remain stable-to-soft on thin demand and amid the current slowdown in the Chinese market.

Overall demand for PE resins in the region was largely subdued in October from the previous month due to weak downstream sectors.

In the week ended 27 October, linear low density PE (LLDPE) film grade were assessed stable-to-soft at $1,150-1,240/tonne CFR (cost & freight) SE Asia, according to ICIS data.

Prices for the PE grade were under downward pressure, particularly in Vietnam, due to recent availability of competitively-priced cargoes from India.

“It is difficult for regular suppliers from [the] Middle East and Saudi [Arabia] to sell their November-shipment cargoes because the bids received were around $30-50/tonne lower, which are closer to the Indian cargo offers,” said a regional trader.

Offers for Indian cargoes were heard at $1,160-1,180/tonne CFR SE Asia, against the $1,190-1,210/tonne CFR SE Asia prices announced for cargoes of Saudi Arabian or Middle East origins.

Supply from India might not be regular and some of those cargoes would only arrive in January, hence, their prices may not be reflective of the current market condition, according to some traders.

“One of the Indian producers might have regular volume to export but the other two producers might only be able to export their cargoes intermittently,” said a southeast Asia-based producer.

Meanwhile, high density PE (HDPE) film grade prices were assessed stable last week at $1,180-1,240/tonne CFR SE Asia.

Most players expect scant trade activity this week as most buyers opted to stay on the sidelines and wait for a clearer price direction before taking any position on the market.

“Usually, there is a high chance that producers will be under pressure to sell towards the end of the year as most of them will be looking to clear their stock,” said a converter.

Most end-users have enough inventory and are not in a hurry to purchase cargoes, market players said.

But any possible easing in PE prices might be gradual due to support from comfortable-to-tight overall supply level of selected grades, such as HDPE film and low density polyethylene (LDPE) film, according to traders.

Meanwhile, the current slowdown in the Chinese PE market is dampening sentiment, and is expected to weigh down on the buying and selling pattern in southeast Asia in the near term.

The majority of players in the region, particularly those in Vietnam, usually check the key China market for price direction.

In the week ended 27 October, China’s import prices for LLDPE film and HDPE film grades were assessed largely softer at $1,150-1,200/tonne and $1,210-1,280/tonne CFR China, respectively, according to ICIS data.

Focus article by Felita Widjaja

Picture: Polyethylene (PE) is used in making plastic bags. (Photographer: Jochen Tack/imageBROKER/REX/Shutterstock)

By Felita Widjaja