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Asian PP, PE markets to start 2022 on a bearish note

by Pınar Polat - ppolat@chemorbis.com
  • 30/12/2021 (09:06)
PP and PE players in China and Southeast Asia have been receiving January offers from both regional and overseas suppliers in the past two weeks with decreases. The regional polyolefin markets have been steadily moving lower since October, with only a few days left until 2022.

Demand has remained stagnant across the region due to the off-season and the uncertainty over Omicron while concerns over new capacities, particularly the ones scheduled for China and South Korea, have persisted.

Apart from comfortable supplies and ebbing demand, the emergence of competitive offers particularly for South Korean origin both in China and Southeast Asia has also weighed on spot prices.

Lower January PP, PE offers to China reinforce bearish sentiment

An agent of a major Saudi Arabian producer reported that the supplier reduced January offers by $40/ton for LDPE, $30/ton for LLDPE and homo-PP raffia, and $10/ton for HDPE from last month.

“Although our supplier is trying to stand firm on its offers due to high costs and shipment issues, they still had to announce a price cut due to weak demand in China. Buyers are not keen to replenish material, keeping their purchases limited to their needs. Chinese players, particularly the ones in the downstream markets, are expected to start their Lunar New Year holiday around mid-January,” the agent said.

Underlining their bearish expectations for the near term, he added, “ We think that there is still room for further price drops due to new capacities, weak demand as well as the impact of Omicron.”

SE Asian markets face fresh price cuts

Last week, a Southeast Asian producer notified January PP and PE prices to Indonesian buyers with up to three-digit decreases and a Saudi Arabian producer cut HDPE and LLDPE offers for January to Vietnam.

Whilst these announcements already suggested a bearish January outlook, more suppliers have applied similar pricing policies since the beginning of this week.

A Middle Eastern supplier reduced its PE offers to regional markets by $10-30/ton from their levels in mid-December, bringing their latest offers to $1230-1250/ton for HDPE and LLDPE film, and at $1550-1560/ton for LDPE film CIF SEA, cash basis.

“We have applied modest drops on our latest offers as we have some backlog orders to clear. Supply is still tight, and delayed shipments are still a problem due to the lack of empty ships, meanwhile,” a company source said.

Within the region’s local markets, a Malaysian producer also cut HDPE and LDPE offers by MYR300/ton ($72/ton), homo-PP raffia, and injection by MYR500/ton ($119/ton), PP copolymers by MYR400/ton ($96/ton) to the local market from December.
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