Lack of sales pressure supports SEA PE markets
A regional trader said, “There is no selling pressure as sellers are able to find other markets in Latin America, Africa and Europe, which offer higher prices.”
During the week ending February 5, the average weekly import PE film prices were flat week-on-week at $1430/ton for LDPE and at $1065/ton for HDPE and LLDPE CIF SEA, cash basis, according to ChemOrbis Price Index data. The prices have been largely stable at around the levels seen in mid-January.
To illustrate the higher pricing in other global markets, spot LLDPE and HDPE film prices in Italy ended last week at four-and-a-half year highs. In Northwest Europe, HDPE ended last week at its highest level since June 2016 and LLDPE prices were last reported at their highest since April 2017.
Chinese New Year holiday approaching
The support for prices comes despite reduced trading activity ahead of the Chinese New Year holidays.
Several traders have already started leaving their desks from late last week to prepare for the celebrations. The region has a large Chinese population and the holidays starting on Wednesday in Vietnam will last until February 16.
Adding to the quiet market is buying resistance.
A source at a MIddle Eastern producer said, “We are not really active in the market at the moment as there is hardly any transaction. Most players have already started their holiday breaks. But there is buying resistance as prices are at high levels. The bids are quite low.”
Falling feedstock costs have been among the factors behind the low bids. Ethylene prices fell 7% week-on-week to $815/ton CFR SEA during the week ending February 5 and were down nearly 20% from early-to-mid January.
Market support expected to remain
Despite the holidays, price support stemming from a lack selling pressure is expected to continue in Southeast Asia PE markets.
The regional trader highlighted that February is a short month and there remains the possibility of the China market returning earlier than usual due to COVID-19 restrictions.
“If China comes back earlier than usual and starts picking up volumes, that might reduce supply to Southeast Asia and may even help lift prices up,” he said.
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