Higher HDPE prices in Turkey, SEA narrow the gap with China
Although Turkey and Southeast Asia should traditionally carry a premium over China due to their relatively smaller market sizes and freight differentials, this has not been the case in these markets for the past few months.
In Southeast Asia, import HDPE prices went below China in late-October and have traded under it since then. However, this gap has narrowed considerably in the recent week as the Chinese HDPE market has been weakening whereas the Southeast Asian HDPE market has been firming up in January.
Chinese PE players are reported to be slowing purchases ahead of the upcoming Chinese New Year amidst the softening ethylene costs which weigh on the market sentiment.
In Southeast Asia, meanwhile, despite buyers’ resistance, sellers started the year with increase attempts on the back of supply concerns due to the upcoming maintenances in the region. In the March-May period, PTT Global and Lotte Chemical Titan will shut their HDPE lines while NPC Alliance Corporation’s 250,000 tons/year HDPE line in Philippines is still offline. The unfavorable netbacks in Southeast Asia also have also supported sellers’ firm stance.
Accordingly, the average of the HDPE markets in China and Southeast Asia is currently trading at par as can be seen from the graph above, although Southeast Asia is yet to regain its premium over China.
A similar situation has also been in place between China and Turkey. Differing from Southeast Asia, import HDPE prices in Turkey traded below China for a longer period of more than 6 months. According to ChemOrbis Price Wizard, this was the longest period of imbalance between the two markets.
Recently, the average of the Turkish HDPE market has moved above China, according to ChemOrbis Price Wizard, although it still needs time to regain its traditional premium.
The recent upturn in the Turkish PE market is justified by limited availability from some Middle Eastern suppliers as well as the recovery in the energy complex, although some players are worried about the hampered demand by the ongoing parity issues.
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