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Nov PP, PE offers to China and SE Asia signal further bearishness ahead

by Pınar Polat - ppolat@chemorbis.com
  • 27/10/2022 (14:25)
Both regional and overseas polyolefin suppliers have approached China and Southeast Asia with stable to softer offers for November. They have cited sluggish demand from these markets as the main reason behind their pricing policy, although supply for import cargoes remains limited amid turnarounds.

China PP, PE markets close October on bearish note

After a short-lived recovery in the post-National Day holiday in early October, China’s PP and PE marketsweakened only within a few days and have remained in the same territory since then. China’s commitment to the zero-Covid policy has affected the buying sentiment negatively, keeping buyers on their toes along with lower Dalian futures prices.

A major Saudi producer’s lower offers for November confirmed the bearishness in the market sentiment. The producer cut its new offers by $50/ton for LDPE film at $1090/ton CIF China, cash basis while HDPE and LLDPE film offers were stable at $970/ton with the same terms. As for homo-PP raffia, prices were down by $10/ton from last month at $940/ton with the same terms.

“The number of import offers is limited due to turnarounds, but there will be an increase in the number of offers after these plants return. There was some panic replenishment of material from Chinese buyers after the holiday. However, China’s decision to stick with the Zero-Covid policy also has a negative impact on demand. We are cautious about the outlook for the remainder of the year,” the agent commented.

This week, Middle East-origin LDPE film prices are standing at $1080-1090/ton CIF China, cash while LLDPE and HDPE film prices are at $950-970/ton with similar terms. When compared to last week, HDPE film prices have been stable so far this week while LDPE and LLDPE film prices have posted weekly decreases of $10-40/ton.

Middle East-origin homo-PP raffia and injection prices have been stable to $10/ton lower from last week at $910-940/ton CIF China, cash basis.

SE Asia polyolefin prices succumb to weak demand

Similar to China, players in Southeast Asia markets have also received lower offers from Middle Eastern and regionalproducers.

Weak regional demand for import cargoes amid the depreciation of local currencies against the USD, a macroeconomic storm, and a spillover impact from the bearishness of the neighboring China market have pulled new offers down.

A regional trader said, “We think prices have room for further decreases over the near term considering bearish China markets and a weak global economic outlook. Maybe this month, we will consider buying from our domestic market rather than importing, as we can avoid currency fluctuations.”

Re-export PE from China available in Vietnam but still not competitive

Vietnamese PE players have been reporting the presence of re-export PE offers from China in the past weeks. However, they still have not been offering a competitive edge to spur some buying interest.

A Vietnamese trader received offers for re-export of Saudi origin offers from China at $1030/ton for HDPE film and $1050/ton for LLDPE film, on CIF Vietnam, cash basis. The same trader also reported that November PE offers they received from a major Saudi producer were standing at $1200/ton for LDPE film, $1070-1080/ton for LLDPE, and $1060/ton for HDPE film, all on CIF Vietnam, cash basis.

He said, “Re-export offers from China are not offering a competitive edge, and we think that they will be revised down later.”
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