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Aggressive US PE offers make a scene across global markets in Q4 after a hiatus of 2 years

by Esra Ersöz -
  • 14/11/2022 (10:22)
With 2022 drawing to a close, players across Asia, Europe and the Middle East report receiving competitive PE offers from the US, standing well below the prevailing market levels. Recently, the traditional year-end destocking appears to have picked up steam, which was not the case in 2021 and 2020 due to relentless supply disruptions back then.

US PE traditionally floods global markets in the last quarter as a part of the year-end destocking activities. The influx of US PE supply has been largely evident, particularly since the start-up of massive capacities in the US in 2018. US PE exports hit a record-high in 2020 with over 10 million tons, despite the fact that production was heavily hammered by the hurricane season in the last quarter. If it hadn’t been for that, the growth would have been much bigger. The following year saw export growth stall and even drop by 17% due to similar production hiccups caused by polar storms and hurricanes, and logistics snarls throughout 2021.

This year, January-September data already show that exports neared 8 million tons, almost catching last year’s total. Unlike the past two years, when US PE did not flood global markets with aggressive prices in Q4, US exports appear to have gained speed in October and particularly November this year, considering the lack of production and logistics strains.

Thus, it would not be surprising to see US PE exports surpassing the 2020 record to hit a new all-time-high by the end of 2022.

Needless to say, US PE finds its way to North and South America as the top destinations, with Mexico having a share of slightly more than 17% and Canada 9% in overall exports in January-September 2022. How about the rest of the world? At what prices are US PE cargoes being offered across Asia, Europe and the Middle East? Scroll down for more!

US – PE – Exports

China: US offers competitive edge only to a limited extent

China, the world’s largest PE buyer, was the third biggest destination for US PE exports in the first nine months of this year, having a 9% share in overall.

US PE offers have been showing up in China recently at competitive prices , forming the low ends of the overall ranges at $970/ton for LDPE and $860-870/ton for LLDPE and HDPE film, all CIF, cash. However, the gap between US and other mainstream origins in China is not wide, with US offers standing only $20-30/ton below, which is not the case in the rest of the global markets.

Europe: US offers stand €100-200 below local origins

Belgium, Europe’s hub for imports, formed slightly more than 8% of US PE exports in Q1-Q3 this year, standing in the 4th place in the list of top export destinations.

This past week, players across Europe reported US offers standing as much as €100-200/ton below European origins with shipments in November and delivery in December or January. Despite the run-down in place in regional markets, Europe is still well above the rest of the globe, attracting global exporters.

A major trader sold US LDPE at €1460-1470/ton FD Netherlands, while deals were concluded at €1180/ton for HDPE b/m and €1200/ton for LLDPE film on DDP Netherlands basis (including all applicable costs). These levels suggest a level at least €100/ton below the low end of the local European origins.

Likewise, US LDPE showed up in Italy at €1300/ton FD (with December delivery) this past week vs other European and non-European LDPE offers at €1450-1550/ton.

Southeast Asia: US offers resurface to heat up competition

Malaysia and Singapore were respectively in the 6th and 8th places of US PE exports in the first three quarters, together forming more than 7% of overall exports.

This past week, players reported competitive US HDPE and LLDPE film offers at $900/ton CIF SEA, forming the low end of the overall ranges and standing $50-90/ton below Middle Eastern origins, although they saw little interest.

The Southeast Asian PE markets have already been grappling with suppressed demand and comfortable supplies amidst Middle Eastern, Southeast Asian and Korean sellers competing for market share as well as Chinese re-exports.

Turkey: US LLDPE speculated even below $1000/ton CIF

Like the rest of the world, US PE offers have also been forming the low ends of overall ranges in Turkey, which was the 10th top destination during January-September 2022 after Spain.

Last week, players in Turkey confirmed US LLDPE, HDPE film and b/m offers at $1020-1050/ton CIF, cash, subject to 6.5% duty for December shipments, standing $40-80/ton below other mainstream origins, amidst rumors of US offers around $1000/ton CIF for later shipments.

What is more, a few players claimed LLDPE offers even heard below the $1000/ton threshold. Even though this information is not confirmed at the time of press, calculations based on netback to China suggest that US HDPE and LLDPE offers theoretically have a large room to come down to as low as $930-950/ton CIF Turkey.
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