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More US PE offers find way to China, SE Asia; yet allocations still limited

by Abdul Hadhi -
  • 17/11/2020 (09:12)
As a lengthy and devastating hurricane season tails off, more US PE cargoes are being offered into China and Southeast Asia. While US PE export allocations have been heard to be increasing as more plants restart, the amount to Asia appears to be still limited.

Offers for US material at around $960/ton for HDPE and $930-940/ton for LLDPE film - both on CIF SEA basis - were noted over the past week, traders reported. In China, meanwhile, US HDPE and LLDPE film were offered around $940/ton and $925/ton CIF respectively, last week.

Average weekly import prices for overall origins in Southeast Asia edged higher from $995/ton to $1005/ton for HDPE and from $950/ton to $965/ton for LLDPE film last week, according to ChemOrbis Price Index data.

In China, imported HDPE was flat at $965/ton while LLDPE film moved up from $935/ton to $955/ton during the week - both on CIF, cash basis.

US supply returns after hurricanes

The relative scarcity of US material had partly supported PE prices in recent months.

A number of major producers operating in Texas and Louisiana in the US Gulf had declared force majeures after shutting down plants as precautionary measures due to the severity of hurricanes.

INEOS declared force majeure on HDPE from its Texas plant on August 26 and was followed by Westlake, Sasol and LyondellBasell which declared force majeure on their US PE from August 31 while CP Chem declared force majeure on September 1.

The plants were initially shut ahead of Hurricane Laura in August but have been kept as more hurricanes made landfall as the previous one subsided.

However, plants have restarted over the past few weeks as utilities resume electricity supply in affected areas and raw material availability issues are resolved.

Continual tightness supports prices

A Thailand-based trader said, “Limited allocation is keeping offers stable. It seems supply is still low for HDPE grade. Even for US origin, there is little allocation even though most plants are back online after the impact of the hurricanes.”

Beyond relatively tight supply, PE prices have also been supported by improving demand in Southeast Asia. “Local demand has started to be better as year-end demand has just started or maybe because of the recent uptrend, buyers want to stock up,” a Vietnam-based trader said.

Yet another factor supporting CIF prices for PE has been limited vessel availability and high freight rates which have made carriage costs very expensive, traders added.
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