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China and SE Asia’s PP, PE markets poised for further slides in May

by Pınar Polat - ppolat@chemorbis.com
  • 28/04/2022 (03:00)
Both regional and overseas suppliers have started to announce their polyolefin prices to Asia markets with decreases for May. This was no surprise as these markets turned bearish in early April mainly due to weak buying interest both in China and Southeast Asia, as well as increasing competition among several origins in Southeast Asia.

China

China has been in a real struggle to contain the latest Covid-19 outbreak since late March, with a wider ban on movements and imposed lockdowns in major financial hubs including Shanghai hindering demand conditions, port operations, and logistics. Fears sparked over a potential lockdown in the capital Beijing, as massive testing was ordered amid increasing cases.

Growing demand concerns have kept PP and PE markets under pressure, and overseas suppliers have reduced their offers to the country by citing this factor.

A major Saudi producer cut its May offers to China by $10/ton for LDPE film, $40/ton for LLDPE film, $50/ton for HDPE film, and $60/ton for homo-PP raffia when compared to last month.

“Our supplier has delayed their shipment to China as they are concerned about the port congestion amid lockdown in Shanghai. There are also growing covid cases in other provinces such as Beijing, which also cast a shadow on expectations of a demand recovery. We are not planning to replenish any stocks now but we think prices will likely firm up after lockdowns are eased as there is lingering cost pressure. But it will take time,” the agent commented.

Saudi raffia offers below $1200 CIF already show up

Traders underlined that oil-driven losses in Dalian futures values and the downtrend in local prices have put extra pressure on import prices this week.

“There is some buying activity at home ahead of the long Labor Day holidays starting this weekend but it is still limited to buyers’ needs. We have heard that the major local producers’ combined polyolefin inventory levels are standing at around 750,000 tons. Still, the cost support has weakened and lower Dalian futures have weighed on the sentiment,” a few traders commented.

Middle-East origin raffia prices have been $10/ton lower so far this week to stand at $1190-1210/ton CIF China, cash basis.

Southeast Asia

The Islamic fasting month of Ramadan and preparations for the Eid festivities in early May have kept market activity subdued. The competition environment among several origins including China, Russia, and South Korea origins, as well as the pressure from more competitive local offers have reinforced the bearishness, pushing suppliers to cut May PP and PE offers.

A Southeast Asian producer lowered its May PP, PE offers to Indonesia with monthly decreases of $30/ton for LDPE grades, $40-90/ton for HDPE grades, $80-150/ton for PP grades.

A Vietnamese trader reported that their Saudi supplier offered May shipment HDPE film at $1370/ton CIF and LLDPE film at $1400/ton CIF last week but closed deals at $1330/ton CIF and $1380/ton CIF, respectively. “Allocation is limited but demand is weak. Buyers are placing bids at very low levels as they anticipate additional price cuts,” he said.

Another Vietnamese trader also reported concluding deals with the major Saudi producer; at $1700/ton for LDPE film, $1380/ton for LLDPE film, and $1360/ton for HDPE film, all on CIF cash basis. “The major producer offered at quite high levels but concluded deals with decreases,” he noted.

S Korean offers compete with aggressive China, Russia origins in Vietnam

Vietnam’s import PP and PE markets have already been smothered by Russia and China origin PP and PE. In return for this, South Korean suppliers have also become aggressive in taking part in this competition.

Another Vietnamese trader reported receiving offers for Saudi origin HDPE film at $1360/ton CIF while South Korea origin offers of the grade were at $1300/ton CIF. “We have received a lot of offers from South Korea this week, and they are more competitive when compared to Middle East origins. We are not inquiring about Russian or US cargoes due to long shipment processes. We think prices still have room for additional losses, so we’ll remain on a wait-and-see stance.”

South Korea origin of raffia and inj. offers were also reported at $1300-1320/ton CIF, almost at par with China origins, which were reported at $1300/ton CIF, meanwhile.
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