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Initial Dec PE, PP offers add to bearishness in China, SEA

by Pınar Polat -
  • 27/11/2019 (10:18)
Having retreated since late September, import polyolefin markets across China and Southeast Asia are signaling further bearishness ahead with initial December offers indicating a new round of drops.

Persistently lackluster demand for PP and PE applications and the pressure from increasing supply are cited as the main factors pushing suppliers to maintain their softer pricing.

China PE market closes last week at multi-year lows

ChemOrbis Price Index suggests that the weekly averages of LDPE, HDPE and LLDPE film prices on CIF China basis closed last week at their lowest levels not seen since late 2008.

Apart from expectations of higher supplies from new capacities and thin buying interest, the weakness across China’s local PE markets has also weighed further on the market sentiment.

Saudi major’s last PE pricing for 2019 further down

An agent of a major Saudi producer reported that the supplier revealed its December PE offers to China with $20-30/ton decreases from November.

“Despite further price reductions, our customers are still asking for lower prices. We think that the import polyolefin markets will remain under downward pressure from increasing overseas supply and limited demand over the near term,” the agent opined.

PP market is also not shining in China

Although the major Saudi producer elected to roll over its PP offers to China for another month, the country’s homo-PP market has also been losing ground with import raffia offers for Indian origin recently nearing the $900/ton CIF threshold for the first time since June 2016.

Chinese PP players are also facing supply woes as China is bracing for new PP capacities around 5 million tons in the fourth quarter in addition to two major local producers’ already high local polyolefin supplies.

Bearish sentiment dominates Southeast Asia PE market

In Southeast Asia, HDPE and LLDPE film offers for US origin have already broken below the $800/ton threshold over the past week while Indian and ASEAN origin offers were also offering competitive levels.

Supply length and buyers’ unwillingness to order cargoes which will arrive close to the year-end or Chinese New Year have kept the market under downward pressure.

SEA PP market loses 8% since downtrend kicked off in Sept

Remaining under pressure from rising overseas supply, import homo-PP market in Southeast Asia has lost around 8% since late September in the week that ended on November 22.

Nghi Son Refinery and Petrochemical’s 400,000 tons/year PP plant is set to restart around end-November after maintenance. This factor also reinforces supply concerns while sellers’ intention to clear their stocks before the year-end also pulls the market further down.

Dec PE, PP offers to Indonesia signal no recovery so far

Since early this week, two Southeast Asian producers have approached Indonesia’s PE market with monthly decreases of up to $40/ton for December while new PP offers witnessed fresh declines as large as $60/ton.

Suppliers’ softer pricing has reinforced the bearish sentiment in the Southeast Asian PP and PE markets, which is unlikely to disappear over the near term.
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