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PP, PE markets in Southeast Asia look for cues from China

by Shibu Itty Kuttickal -
  • 04/07/2023 (02:28)
PP and PE market players in Southeast Asia are looking for indications from China on the direction ahead. China’s import PP markets failed to replicate a positive turn in the domestic markets, while a two-week rebound in China’s PE markets is being viewed with an abundance of caution as the demand side still looks not so promising.

Some traders say prices to China to trend higher

A South Korean trader in the region termed the current sentiment “bullish”. He pointed to the interest rate cuts in China, which according to him, “have aided in raising domestic consumption and lifting domestic PE and PP prices.”

A more solid recovery in the China’s PP and PE markets may be reflected on the Southeast Asian markets. Apart from that, stronger energy values, and a recent upturn in feedstock prices, may lend further support to polyolefin prices.

“We see PP and PE prices trending higher amid greater energy uncertainty and oil volatility, as well as further monetary and fiscal stimulus measures to revive the Chinese economy,” the trader said.

A Japanese trader agreed, saying, “The sentiment has turned positive as a result of the recovery in China’s local PE and PP prices ... We see PE prices holding at current ranges, with potential further upside due to higher energy and feedstock prices, as well as further monetary policy measures in China,” he added.

Southeast Asia PP prices stabilize at 3-year lows, PE nudges up

Last week, import homo-PP raffia and inj. prices for all origins were assessed stable from the previous week at $850-920/ton CIF Southeast Asia, cash. The weekly averages of the overall ranges for the grades have stabilized at their lowest levels since May 2020, ChemOrbis Price Index data shows. Till last week, the PP grades had trended downwards by 18-20% on an average from levels noted in the first week of February.

As for PE, import LDPE film prices for all origins for the latest week were assessed $10/ton higher at $900-980/ton CIF SEA, cash, while both HDPE and LLDPE film prices were assessed $20/ton higher at $940-1000/ton and $920-980/ton CIF, cash, respectively. The latest prices of PE film grades show 18% declines for LDPE and a 12-14% slide for LLDPE and HDPE since early February.


A turnabout in feedstocks ahead?

Meanwhile, both Asian ethylene and propylene prices have rebounded following a ten-week downtrend. The olefins were lifted by a mix of short-term factors, according to traders, including short covering of July contract cargoes to Chinese end-users, and, for propylene, supply disruptions in China and South Korea.

“The market sentiment has also turned positive on stronger energy values and lifted by the sentiment recovery in the Chinese domestic polyolefin markets,” a trader said. The question though is how long an olefin price upturn could last.

The other side of the coin

On the flip side, demand has persistently stayed weak, and that continues to be a major concern for regional markets and an obstacle to price hike attempts.

A Middle East producer cut LLDPE and LDPE film offers to Southeast Asia by $20/t during the week and raised HDPE film price by $10/ton. "The market overall is weak. Weakening local currencies are also a bearish trend, which prevents any imports. Others are worried that they don’t have adequate end-product orders and so have reduced their purchases. The market is shrinking, and we’ve no idea when it can recover,” a regional representative of the producer said.

In Vietnam, a trader said the market has been quieter during the week as local players had purchased enough in the previous two weeks. “We feel it’d be hard to sustain the current uptrend because the demand is just not there. As for LDPE film, we hear Chinese inventories are at the highest point since 2018, although many LD plants are on maintenance currently,” he added.
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