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LDPE tightness persists in global markets

  • 17/10/2016 (03:20)
Players in major markets have been reporting tight supplies for LDPE for a few months and this factor has been keeping prices for this product firmer than the other PE products. The lack of new capacities for LDPE as well as production limitations by major suppliers have contributed to the relative strength of LDPE prices despite the fact that demand is not considered spectacular in many of the markets.

In China, LDPE supplies have been tight since early August due to the production shutdowns that started ahead of G-20. Although this tightness was expected to find some relief in September, players report that it is still in place, continuing to cause larger increases for this product with respect to others. “Local PE prices are firming due to the ongoing LDPE tightness, which also supports sentiment for other PE products although demand for LLDPE and HDPE is not strong,” commented a Chinese trader.

In Southeast Asia, LDPE film was the strongest among other PE products as it has been the case in China. The overall ranges were mostly stable for HDPE and LLDPE while import LDPE prices were stable to $20/ton firmer this past week. Players reported tightness for this product, particularly in Thailand and Malaysia, with the agricultural season also keeping demand for this product healthy in the midst of insufficient availability. However, players were expecting to see some easing in LDPE supplies by mid-October when PTT restarts its plant after a maintenance shutdown.

From the Middle East, many major producers reportedly have limited allocations to Turkey, players have been reporting for more than a month. Apart from their production constraints, the fact that they are not happy with the netback to Turkey is also playing a role in their reduced LDPE allocation to Turkey, in some players’ opinion. What is more, the domestic producer, Petkim, has been having some production issues with its LDPE lines. A large buyer claims, “The problem at the producer’s LDPE-t line is likely to persist for one month more.” This news is yet to be confirmed by the producer itself, though.

When looking at Europe, players widely report a similar situation. Comfortable availability for LLDPE and HDPE caused more visible price decreases whereas the tightness, particularly for some special LDPE grades, has restrained the downturn in the spot market of Northwest Europe. A West European producer pointed to its tight availability for LDPE, arguing, “We have rolled over our HDPE and LLDPE prices but we are open to negotiation. However, we are not planning to concede to discounts for this product.”

Likewise in Italy, distributors reported lowering their HDPE and LLDPE offers slightly. “Demand is very slow and we hear that lower prices are available in the market. Yet, LDPE is still traded at a premium over other products due to tighter supply,” a trader commented.
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