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Correction: China, SEA PE markets continue downtrend as Nov ends, what lies ahead in Dec?

by Merve Sezgün - msezgun@chemorbis.com
  • 29/11/2023 (14:37)
(The LDPE film deal levels for Saudi origins have been corrected in the bolded part of the related paragraph.)

In China and Southeast Asia, the import PE markets have remained on a weak note since around late-September or early October. As November draws to a close, the weekly averages of prices for all origins stand at the lowest levels since July, as per ChemOrbis Price Index data.

Although the persistent weakness in end demand contributes to a gloomy outlook for December, there has been an intensifying tug of war between sellers and buyers amid high ethylene costs and a lack of ample availability from major Middle Eastern suppliers for particular grades.

Slow uptake pushes suppliers to offer discounts

This week has seen import PE prices in both China and Southeast Asia recording renewed decreases, driven by a lack of buying enthusiasm that is pushing sellers to extend additional discounts.

A Shanghai-based trader explained, “Few orders for end-products being exported to Europe and America have led to a significant weakening of demand. Traders are cutting their purchase volumes in response to the overall weakness in downstream sectors. Buyers are exercising caution and only making purchases based on essential needs.”

In Vietnam, a regional representative of a Middle Eastern producer also said, “Buyers are showing a lack of interest in current prices, opting to maintain low inventory as the year draws to a close. If demand remains weak, there is a possibility that prices could experience further decline.”

Saudi LDPE dealt at as low as $950 CIF in China

For the current week, PE prices for overall origins have so far been quoted at $950-1000/ton for LDPE film, at $910-970/ton for HDPE film, and at $890-940/ton for LLDPE film, all on CIF China, cash basis. Compared to the previous week, the ranges are stable to $20-30/ton lower.

A few LDPE film deals for Saudi shipments were reported for limited quantities at $950/ton CIF.

In Southeast Asia, the price levels have been quoted at $940-1020/ton for LDPE film, at $960-1010/ton for HDPE film, and at $920-980/ton for LLDPE film, all on CIF SEA, cash basis. The ranges currently show rollovers or decreases ranging from $5/ton to $20/ton week over week.

HDPE supply from Mid-East limited

On the other side of the weak demand scenario lies the fact that Middle Eastern suppliers do not feel much inventory pressure, particularly for the HDPE film grade. This has somewhat constrained the extent of price decreases so far.

Several traders across Asia confirmed that the availability of HDPE from Middle Eastern suppliers, including the major Saudi producer, is limited for December shipments. The Saudi major rolled over their December HDPE film offer from November at $960/ton CIF China, cash.

“The Saudi major has limited allocation for HDPE film. This month, we managed to secure only around 160 tons from them. Meanwhile, the supply of LL and LD is normal,” a Vietnamese trader said.

The lack of any major supply pressure has led some sellers to maintain their offers or refuse to give any large discounts despite the weak state of demand.

Buyer and seller ‘tug of war’ may intensify in Dec

Players across China and Southeast Asia are divided on their market outlook for December. Buyers expect to see a further erosion in price levels next month, pointing to slower activities in major downstream sectors. Sellers, however, believe that the market has not much room left for additional drops.

“We think that prices are near the bottom levels. Sellers try to hold market level despite the lack of buying interest. The PE market may be stuck between weak demand and sellers’ reluctance for further cuts, at least for the near term,” a trader opined.

Most converters, on the other hand, believe that prices should continue to face downward pressure due to slow demand and sluggish global economy for the rest of the year.
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