China’s import PE market yet to regain its premium over ethylene
According to the below graph, import LDPE film prices on weekly average basis are currently being traded with a discount of $45/ton against spot ethylene prices. As for LLDPE and HDPE, ethylene is carrying a larger premium of around $90/ton and $110/ton, respectively.
An agent of a major Saudi Arabian producer reported that the supplier approached the Chinese market with monthly hikes of $40-60/ton on its new September offers. “Traders in China are aggressively building stocks nowadays as the high season is approaching. We think that PE will maintain its firm path since spot ethylene prices are quite firm,” the agent opined.
According to a trader, an Emirati producer also lifted its September PE offers to China by $40/ton for HDPE and by $70/ton LLDPE film while another trader secured Qatari HDPE and LLDPE for September with $30-40/ton increases from August.
Despite these sizeable hikes, spot ethylene prices remained above overall import PE offers, suggesting that integrated producers could gain substantial margins by halting their PE production and selling ethylene instead. A few players said, “Some Asian PE producers are planning to produce ethylene instead of PE at their integrated plants in September, which might cause tightness in regional PE supplies over the near term.”
According to data from ChemOrbis Price Wizard, spot ethylene prices in Asia are currently standing at their highest levels since late February. Spot prices surged by around $345/ton since the upturn kicked off at the beginning of July. Growing supply concerns from the US given Hurricane Harvey have recently contributed to the bullish ethylene outlook.
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