HDPE margins turn negative as prices move below ethylene in SEA
Spot ethylene prices on a CFR Far East Asia basis have recorded a cumulative increase of $130/ton since the second week of August while they have recently stabilized at around $1195/ton, the highest level since mid-April.
ChemOrbis data indicates that the gap between spot ethylene prices in Far East Asia and CFR Southeast Asia based HDPE film prices is currently standing at around $42/ton, suggesting that HDPE film is now being traded significantly below its breakeven point for producers in Northeast Asia.
The situation for the region’s import LDPE and LLDPE markets is not the same since they have been carrying a notable premium over HDPE film prices for the last few months due to their relatively tighter availabilities. Nevertheless, due to the recent run up in spot ethylene prices in Northeast Asia, data suggests that spot ethylene is currently standing just $7/ton below LDPE film and only $3/ton below LLDPE film prices.
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