PP, PE prices on a firm footing in China, SE Asia ahead of holidays

Offers have risen lately in the Asian polyolefin markets on the heels of rising upstream markets as well as stock replenishment ahead of the Chinese Lunar New Year holidays next week. However, buyers remain skeptical amid concerns of an Omicron-induced economic slump.

ChemOrbis Prize Wizard shows import PPH raffia prices in China have recently been stable to slightly firmer at around $1090/ton CIF after falling by about 12% from the second week of October to the end of 2021. Import PPH prices in Southeast Asia have shown a rebound so far in January to stand around $1250/ton after also falling by about 12% during the same period.



ChemOrbis PrizeWizard also shows LDPE, LLDPE and HDPE prices mostly on a similar pattern during the same period, with prices mostly sliding from highs in October and trending steady or upwards this month.



Rising costs help sellers get an upper hand

Oil prices have risen by slightly more than a quarter since end-November, keeping propylene prices on the up curve and providing a reason for sellers to raise offers. Import costs rose as freight rates also climbed as a result of a shortage of containers in Asia. This also meant slowing import arrivals to both China and Southeast Asia.

“The recent increase in import offers is mostly a result of firmer upstream costs and rising freight rates in Asia. Many producers in Asia are making losses in polyolefin production and are forced to cut run rates and hike offers as costs have surged,” said a trader in China.

Stock replenishments have mostly been completed

“Demand has now cooled off as replenishments for February have been tied up. We may see price hikes late in February if the COVID-19 situation allows downstream markets to return in full swing after the holidays,” she added.

In China, some buyers preferred the domestic product to imports. This was also affirmed by domestic stocks falling under 500,000 tons

In China last week. “Import material is too expensive compared to domestic material. Import prices may rebound after CNY holidays as producers are incurring losses,” another trader said.

Middle East producer sold out HDPE, LLDPE allotments to SEA

In Southeast Asia, a trader said a major regional producer increased February import prices by $40/ton for LDPE and homo-PP raffia and by $20/ton for block copolymer PP. In the previous week, the producer had hiked prices by $70/ton for LDPE film, $20-30/ton for LLDPE film, $20-40/ton for HDPE film, and $50-80/ton for PPBC.

Vietnamese players said a Middle East producer had sold out both LLDPE and HDPE allotments at $1270-1290/ton CIF Southeast Asia.“But we bought 400 tons at a cheaper level of $1230-1240/ton from another Middle East producer, which has limited allotments currently. Demand remains weak and buyers are not in a hurry to replenish before the CNY holidays,” one of them said. “Domestic prices also have risen as a result of the increase in import prices,” he added.

Ethylene cautiously responds

Ethylene prices were on a steady downtrend since mid-October under the pressure of new capacities, defying the crude’s spike in the past two months. This week, they have cautiously responded to the firmer upstream and downstream by rising $10/ton on week.

“Ethylene prices could also start rising shortly as naphtha crackers are slowing run rates because of lower profitability,” said a Singapore-based trader.