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Global PE faces less upwards pressure than PP

  • 23/01/2017 (04:01)
Players operating across the global polyolefin markets agree that trading activities have been slower for PE than for PP over the past couple of weeks. PP demand was reported to be better given lack of ample supplies.

In Asia, upcoming maintenance shutdowns supported a firm trend in the regional PP markets during the past week, with prices witnessing modest increases in Southeast Asia while the PE activity was a bit slower amidst regional buyer’s resistance against Middle Eastern suppliers’ hike announcements for February.

Despite pre-Chinese New Year holiday lull, PP players commented that sellers are trying to stand firm on their offers, citing several planned turnarounds as well as the news that PetroRabigh and Borouge are experiencing unexpected shutdowns, which means that PP supplies from the Middle East might reduce in the near term.

In Southeast Asia alone, there will be five maintenance shutdowns in the first quarter, including PP plants of Thailand’s HMC and IRPC, Indonesia’s Polytama Propindo and Pertamina and Malaysia’s Lotte Chemical Titan. According to the most updated data, a total of around 2.02 million tons/year of PP capacity is expected to be out from the market during that period.

In Turkey, a few traders also affirmed that they have been receiving more price inquiries for PP than for PE for the last couple of weeks.

A trader based in Gaziantep, Turkey commented, “Middle Eastern and Iranian suppliers are standing firm on their offers for both PP and PE despite slow market activities amidst serious currency issues. Still, we see better demand for PP, especially for the fibre grade which is a bit tight. For PE, LDPE demand is the weakest among other products.” A second trader added, “Demand is not great, but we are still able to sell some PP fibre. Buying appetite for PE is weaker.”

When it comes to Europe, regional polyolefin players started to voice firm expectations on monomer contracts for February, citing higher upstream costs, upcoming cracker shutdowns and improving demand on the derivative producers’ side.

A distributor in Germany stated, “We expect to see increases of around €40-50/ton on February propylene contracts amid tightening supplies and strong upstream costs while smaller increases of €20-30/ton are likely to pass on ethylene contracts since spot propylene has recently witnessed larger gains when compared to spot ethylene.”

In Europe, spot ethylene prices climbed by around €30/ton since the beginning of January while propylene prices posted larger hikes of around €90/ton during the same period. A different distributor from Italy noted, “We think that the PE market is under a softer pressure than the PP market.”
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