Destocking time of the year: US PE floods global markets with aggressive prices

It is that time of the year again for the world’s largest PE exporter. In nearly every region, an increase in the number of PE offers from the US has been observed as a part of destocking activities exerting downward pressure mainly on Middle Eastern origins that have been trying to hold the markets in check. This influx of US PE with competitive prices can also be attributed to an unusually calm hurricane season, coupled with ethane feedstock-derived cost advantage, smooth freight conditions and subdued demand.

Asia: More US PE shipments add to supply glut

With the seasonal lull kicking in amidst an already oversupplied situation, China’s import PE markets have already seen discounts for various origins. US PE offers formed the low ends in the import markets. Despite not necessarily being too aggressive and standing only $10-20/ton below Mid-Eastern origins, US PE has clearly contributed to the weakening with the abundance of offers in the past couple of weeks.

Low consumption levels both in China and SEA has been the main culprit behind the softer trend. The relatively less aggressive American PE offers, which are trading slightly below those of other origins unlike in other markets, can be largely attributed to the already depressed price levels. Meanwhile, with demand remaining persistently weak, even deeper discounts may prove insufficient to stimulate renewed interest in the market.

Europe: Competitive US PE upends both local and import sources

The situation has been a bit more dire in the European PE markets, which have declines both in the local and import markets despite higher ethylene settlement. As import offers from the US have started surfacing with discounts, according to traders’ reports, locally-held US PE offers have also offered a competitive edge on FD basis and weighed on the spot ranges. Buyers pointed to the more aggressive offers in the market. However, these sporadically turned into deals and were not deemed as the market level. The locally-held US offers have stood roughly €50/ton below the average for European materials.

When it comes to imports, US PE offers have been rather competitive both on CIF and DDP basis, with delivery in January. US HDPE b/m was dealt at €970-980/ton on DDP Italy, 60 days basis. This is €120-130/ton below the low end of the overall spot HDPE b/m range. Another US HDPE b/m offer emerged at €1000/ton on CIF terms, meanwhile. LLDPE C4 film was offered at €1000-1050/ton on DDP basis, which stood €50-100/ton below the bottom ends in Europe.

Those US PE cargoes, bought at lower levels with delivery in January, may arrive in bulky tonnages. Hence, players are not that upbeat about early Q1 2025. It is straightforward to say that US destocking efforts could dampen the prospects for a rebound in European markets as the new year kicks off, potentially curbing demand for restocking.

Türkiye: US HDPE and LLDPE grades the most aggressive

In Türkiye, while US LDPE did not pose significant competition amid limited availability and better netbacks elsewhere, it has emerged as a dominant competitive force in the LLDPE and HDPE markets, outpacing other origins that attempted to keep the downtrend in check.

As per the weekly average data on ChemOrbis Price Index, US LLDPE C4 film and HDPE film prices traded $50/ton below the Middle Eastern counterparts on CIF terms as of early November. American PE offers in Türkiye have been a pressure point since mid-September, with the downtrend gaining steam in October and November. An uneventful hurricane season and smooth logistics operations have come on top of year-end destocking activities as well as poor derivative sectors amid financial challenges in Türkiye, deepening the pressure on prices for both the US and other origins.

In fact, such low-price levels, US LLDPE C4 film at nearly a year low and HDPE film at about one-and-a-half year low, spurred interest among buyers who wanted to capitalize on 3-digit levels. Needless to say, this has exacerbated the pressure on Mid-Eastern origins trying to hold above $1000/ton CIF, subject to 6.5% customs duty threshold, citing low netbacks in Türkiye.

Africa: US PE destocking ramps up

A fierce competition from US suppliers has been observed in North African PE markets. Although Middle Eastern suppliers have attempted to stem or alleviate the slide as has been the case in other outlets, weak demand and aggressive offers from the US dented these attempts and reinforced the bearish run.

In Algeria, this led to PE drops of up to three digits for November. US PE offers stood $60-70/ton below Mid-Eastern HDPE film, b/m and inj. prices, offering a very competitive edge. A converter remarked, “Initial PE offers from the Saudi major proved unworkable despite freight rate hikes and limited supplies. Aggressive US origins and lackluster demand pushed prices to new lows.”

A similar scenario unfolded in Nigeria, where a combination of unpromising downstream demand and competitively priced US cargoes further entrenched the downtrend. Saudi PE prices, commanding a huge premium over US offers, were deemed unappealing given the sluggish trading activity. US offers were trading around $40-50/ton below Saudi LLDPE film, $70/ton below HDPE film and $120-140/ton below HDPE b/m and injection, all on CFR Lagos, subject to 10% customs duty, cash basis.

In Kenya, while Saudi sellers mostly remained reluctant to issue major discounts, US PE cargoes have led to large drops on the low ends of the overall price ranges. Latest assessments stood at $1100-1110/ton for LDPE film, $980-1030/ton for LLDPE film, $980-1010/ton for HDPE film, $1000-1040/ton for HDPE b/m and inj., all on CFR Kenya, 90 days basis. US PE offers were around $20-30/ton lower than Saudi origins.

East Med: US PE trades more than $100/ton under Mid-East

Last but not least, while the tendency among Middle Eastern suppliers to keep their prices steady persisted, US PE offers have weighed on the East Mediterranean markets. Saudi PE suppliers have adopted a barely changed pricing policy for November, bearing economic struggles and political unrest in mind. However, US PE cargoes have still stood below Saudi prices, forming the low end of the overall price ranges.

US PE offers were reported as low as $1070-1080/ton for LDPE film and $950-970/ton for LLDPE C4 film, HDPE film, b/m and injection grades, all on CIF Lebanon, cash basis. LLDPE and HDPE grades stood around $120/ton below Saudi origins.