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Initial post-holiday PE offers surface up in SE Asia in shadow of ethylene

  • 26/02/2018 (04:07)
Asian PE players have been gradually resuming their business following the end of the week-long Chinese New Year holiday which started on February 14. Meanwhile, initial post-holiday offers have started to emerge in Southeast Asia with visible increases since late last week despite the ongoing downward trend of spot ethylene.

A few Asian sellers maintained their firm stance on their fresh offers by pointing to a series of bullish factors including supply limitations from the Middle East amidst maintenance shutdowns, the ongoing tightness for HDPE grades as well as the recent uptick in the energy complex and LLDPE futures on the Dalian Commodity Exchange.

A Malaysian producer reportedly announced its March HDPE and LDPE offers to Southeast Asia except for Indonesia with $60-80/ton increases from February while a trader reported that Singaporean mLLDPE offers to Malaysia increased by $20/ton when compared to the pre-holiday levels.

An Indonesian converter reported that he received fresh LDPE and LLDPE offers from a South Korean producer with hikes of around $50-70/ton.

A converter in Vietnam, meanwhile, received $13-18/ton higher PE offers for locally-held Saudi origins when compared to the latest levels before the holiday. The buyer opined, “We think that prices might see some further gains in the upcoming weeks given the ongoing tightness in the import market. Local availability is also slightly limited.”

On the other side of the coin, some buyers questioned the sustainability of these increase attempts, citing the ongoing decreases in Asia’s spot ethylene market. Ethylene’s downward trend, which kicked off in the second half of January, gained speed last week, with spot levels witnessing a daily loss of $55/ton on Friday.

In addition to weaker ethylene prices, players in China report that two major domestic producers’ overall PE supplies improved during the Chinese New Year holiday while the ongoing holiday lull across the region is also cited as another factor that may restrain further increases in PE prices.

A source from a Thai producer noted, “We are planning to announce our April prices by next week and we think they will indicate rollovers or slight increases in line with the planned maintenance shutdowns at our plants in the February-March period. However, we think that offers in general have limited room to go further up in March as most buyers are reluctant to accept a new round of hikes.”

A trader in China commented, “Buyers are yet to fully return to the market while traders are ready to deplete their stocks quickly in March. We think that it is hard to see further increases in March and we expect a mostly stable trend. There may even be a downturn after the post-holiday replenishment activities are completed. PE allocations to China were quite limited in February; however, we are not sure whether demand will be strong enough to support further increases or not as prices have already reached multi-year highs.”
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