Global polymer players evaluate OPEC decision
NYMEX crude futures settled close to $50/bbl on Wednesday before seeing $50.51/bbl during intra-day sessions on Thursday. ICE Brent crude futures settled above $50/bbl on the day of the news.
Players in global polymer markets, where a softening trend was in place since mid-November, started to express their opinions towards the decision as it caused crude oil prices to shoot up even before the meeting was finalized on Wednesday.
In Turkey, PP and PE prices eased down further this week with domestic producer Petkim issuing price cuts following lower monomer contracts in Europe earlier this week. However, surging energy costs following OPEC’s decision caused some players to comment, “Prices may not fall much during December if a firm oil outlook can compensate the weak year-end activity and eased availability for PP and PE.”
Prior to the news, two Middle Eastern polyolefin producers expressed their pessimism about buying interest pointing to year end, saying they were ready to give moderate discounts for December. On Thursday, a Middle Eastern PE producer commented, “Overall demand is visibly dampened in Turkey by currency problems and cash constraints. Plus, supply is not as limited as before owing to irregular origins showing up heading to year-end. Hence, we believe rising oil costs would only limit the drop amounts but no upturn is likely before January.”
Meanwhile, European buyers were a bit worried about the outlook for January as they think that prices might increase due to the rise in the crude oil market. “However, the impact on polymer prices would not be felt before 5-6 weeks,” they add. A few buyers have plans to build some stocks but generally players do not foresee a major firming for next month despite rising energy prices.
Considering the recent developments, an Egyptian manufacturer said, “We received rollovers from our Saudi PP, PE supplier while their offers are open to negotiation. We hope to obtain $20/ton discounts. OPEC’s decision may affect the market by early 2017, but overseas suppliers won’t take any advantage of it or issue large increases as their prices are already high. Local producers may lift their prices though for prompt cargos.” Another buyer, who was offered stable to softer prices for December shipment Saudi cargos, thinks that the rallying crude market may cause $10-20/ton price gains but not more than that as the market will slow soon and PP, PE supplies are sufficient.
In China, a trader stated, “We received more inquiries following OPEC’s decision amidst an improved atmosphere.” Nonetheless, a second trader argued, “Despite the sharp hikes in crude prices, offers for certain PP and PE grades continued to lose ground due to unsupportive demand. December may be a month of stable prices but no price increases are possible.”
More free plastics newsPlastic resin (PP, LDPE, LLDPE ,HDPE, PVC, GPS; HIPS, PET, ABS) prices, polymer market trends, and more...
- Taiwanese major’s March PVC offers to Asia up despite virus fears
- Virus-impacted demand inflicts toll on Vietnam's PE market
- HDPE fails to track firmer trend of LD, LLDPE in Europe
- China’s ABS market on soft path dragged by subdued demand
- Softening trend prevails in SEA PP market as virus fears dampen sentiment
- Chinese producers cut PET offers further amid coronavirus outbreak
- Oil and petchem companies’ earnings hit by falling margins in 2019
- Will February PP hikes prove workable in Europe?
- Turkish players question future outlook as import PP, PE prices see 6-month highs
- Asian PVC markets stay strong as tightness overshadows virus fears