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Global PP, PE prices yet to reflect plunge in crude oil futures

by Merve Sezgün -
  • 13/03/2020 (04:03)
The OPEC+ meeting broke up without an agreement on March 6, sending crude oil prices into freefall. In global polyolefin markets, the oil plunge is yet to be reflected on prices as players have adopted a cautious wait-and-see attitude amid the significant volatility of energy markets.

Data from ChemOrbis Price Wizard reveal that the weekly average of WTI (NYMEX) crude oil futures has plunged $13/barrel or 28% on a weekly basis to hit its lowest level since February 2016.

Import PP, PE prices see no major changes in Asia

Amid limited trading, homo-PP raffia and LDPE film prices on CIF China basis have tracked a largely stable trend so far this week while LLDPE and HDPE film have witnessed small drops of $5-10/ton. In Southeast Asia, meanwhile, prices have moved in a similar price trend.

“The import markets in Asia have had no immediate reaction to the oil slump as most sellers have withdrawn their offers in order to gauge its impact on monomer prices and regional demand. Meanwhile, suppliers of Middle Eastern PP are reluctant to cut offers, citing their limited availability,” a trader based in Vietnam noted.

China’s import PP raffia market currently hovers around a four-year low while PE prices are at their lowest levels not seen since November 2008.

“The market sentiment is still weak, although business activity is slowly recovering from the coronavirus outbreak. The recent oil plunge would add to the downward pressure on prices. However, we are yet to see any major price changes amid a limited number of import offers,” commented a China-based seller.

Market activity stalls in Turkey after crude slump

According to polyolefin players in Turkey, trading activities have been almost at a standstill as the combination of plunging oil futures and rising fears of the COVID-19 pandemic has brought expanded uncertainty to the market.

The number of offers and bids has been limited as most players have adopted a wait-and-see attitude. PP and PE prices on CIF Turkey basis were stable to slightly lower by around $10-20/ton when compared to last week.

“The impact of the coronavirus outbreak on major economies coupled with the recent plunge in oil futures may weigh on polyolefin prices over the near term. Rising USD/TRY may put extra pressure on activity in Turkey,” players argued.

March deals concluded lower in Europe, oil’s impact yet to hit

Players in Italy and Northwest Europe reported that March PP and PE deals have started to be concluded with decreases while the impact of plunging crude oil prices is yet to be fully felt.

A seller in Italy commented, “In the local PP market, March deals are being closed with €10-20/ton decreases as buyers resist sellers’ rollover announcements amid rising uncertainty over the economic impact of coronavirus. The oil plunge, meanwhile, is weighing on the outlook for April as buyers are already voicing bearish expectations for the upcoming month.”

In the regional PE markets, local prices have also followed a softer trend this week, with decreases ranging from €20/ton to €50/ton passing on March deals. “Prices might extend their losses into April as the monthly ethylene contracts might settle with a notable decrease in response to the slump in energy costs,” players opined.
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