Return of US PE pressurized prices in global markets
by Manolya Tufan - mtufan@chemorbis.com
Major global markets including Southeast Asia, Turkey and Europe have received more US PE offers lately after a prolonged period of absence. This was a conclusion of growing inventories inside the US, year-end lull and the Omicron variant putting further strain on demand.
Traditional year-end destocking activities from the US have not widely been the case in the past two years. Supply chains that were heavily disrupted following a slew of hurricanes in 2020 and global shipping crisis curbed exports from the US.
Contrary to the downtrend seen back in fourth quarters of 2018 and 2019, US origin PE prices in Southeast Asia and Turkey followed a mostly stable to firmer trend in Q4 2020.
However, this year US PE reappeared in October as export allocations have grown. The pressure from these cargoes has become more visible in December as prices either formed the low ends or stood below other origins.
US LD forms the low end in China
US LDPE formed the low end of the overall import range at $1440/ton on CIF China, cash basis, at par with Indian origin cargoes. Chinese markets have been under the influence of bearish demand outlook and capacity additions.
Downstream players may leave for Chinese New Year holiday earlier than expected due to weak orders amid the Omicron variant. China’s dependency on PE imports will gradually reduce with plant startups. This may urge importers to look for other destinations, also considering poor netbacks in China.
Re-exported US PE finds way to SE Asia
Southeast Asia, a major destination for US PE exports, felt the pressure from US cargoes more visibly as a part of year-end destocking. Import suppliers prefer to divert their cargoes to the region due to better netbacks and weak Chinese demand.
US HDPE blow moulding was dealt at $1130/ton CIF Vietnam, which was re-exported from Taiwan.This level stood well below the prevailing Middle Eastern origins, offering a competitive edge in a bid to help sellers clear stocks.
US PE offers discounted to Mid-Eastern materials in Turkey
In Turkey, US PE offers emerged with visible drops in December, which were interpreted as short sales by some players amid piling stocks in view of Omicron woes and year-end festivities.
US PE ranges were assessed with $100-110/ton drops for LDPE and HDPE respectively at $1600-1620/ton and $1350-1370/ton CIF, subject to 6.5% duty. Although not widely confirmed, LDPE offers as low as $1550/ton were also heard from the market. LLDPE C4 film was also $50/ton lower on both ends at $1450-1470/ton with the same terms.
US origin PE cargoes are currently being offered at a discount of around $30-60/ton to Mid-Eastern materials. Aggressive offers are likely to lead to additional price cuts from Middle Eastern sellers in January.
Europe to brace for more US PE
US PE film offers have started to emerge more often lately in Europe, which is the region offering by far the most attractive netback. While prices are still not attractive enough both in the locally-held and import markets, the pressure is expected to mount in Q1 2022. US HDPE film offers stood at €1550-1600/ton DDP, 60 days, while LDPE and LLDPE offers were respectively at €1780-1800/ton and 1560/ton, with delivery between January and late February.
According to statistics, overall US PE exports shrank 17% on year in January-October 2021 as a result of the heavily disrupted production. Nearby destinations including Canada, Mexico and Brazil were the only routes the US ramped up exports this year while they lost considerable market share in China, Malaysia, Turkey and Singapore.
US PE exports to Europe were somewhat different, statistics reveal. They slid 3% on year to Belgium, although Belgium still stood as the third major destination with more than 655,000 tons after Mexico and Canada. PE exports were up 11% to Spain and by 9% to the UK on year whereas down by 21% to Italy.
A competition among sellers seems inevitable as Europe is bracing for more US PE cargoes starting from February-March, barring disruptions to production and port operations. Plus, freight rates from the US to Europe are not too high to stem US PE flow, as in the routes from China to the rest of the world.
A spate of turnarounds within the bloc may take the edge off the pressure from rising supplies during Q1 2022, argued some sources.
Traditional year-end destocking activities from the US have not widely been the case in the past two years. Supply chains that were heavily disrupted following a slew of hurricanes in 2020 and global shipping crisis curbed exports from the US.
Contrary to the downtrend seen back in fourth quarters of 2018 and 2019, US origin PE prices in Southeast Asia and Turkey followed a mostly stable to firmer trend in Q4 2020.
However, this year US PE reappeared in October as export allocations have grown. The pressure from these cargoes has become more visible in December as prices either formed the low ends or stood below other origins.
US LD forms the low end in China
US LDPE formed the low end of the overall import range at $1440/ton on CIF China, cash basis, at par with Indian origin cargoes. Chinese markets have been under the influence of bearish demand outlook and capacity additions.
Downstream players may leave for Chinese New Year holiday earlier than expected due to weak orders amid the Omicron variant. China’s dependency on PE imports will gradually reduce with plant startups. This may urge importers to look for other destinations, also considering poor netbacks in China.
Re-exported US PE finds way to SE Asia
Southeast Asia, a major destination for US PE exports, felt the pressure from US cargoes more visibly as a part of year-end destocking. Import suppliers prefer to divert their cargoes to the region due to better netbacks and weak Chinese demand.
US HDPE blow moulding was dealt at $1130/ton CIF Vietnam, which was re-exported from Taiwan.This level stood well below the prevailing Middle Eastern origins, offering a competitive edge in a bid to help sellers clear stocks.
US PE offers discounted to Mid-Eastern materials in Turkey
In Turkey, US PE offers emerged with visible drops in December, which were interpreted as short sales by some players amid piling stocks in view of Omicron woes and year-end festivities.
US PE ranges were assessed with $100-110/ton drops for LDPE and HDPE respectively at $1600-1620/ton and $1350-1370/ton CIF, subject to 6.5% duty. Although not widely confirmed, LDPE offers as low as $1550/ton were also heard from the market. LLDPE C4 film was also $50/ton lower on both ends at $1450-1470/ton with the same terms.
US origin PE cargoes are currently being offered at a discount of around $30-60/ton to Mid-Eastern materials. Aggressive offers are likely to lead to additional price cuts from Middle Eastern sellers in January.
Europe to brace for more US PE
US PE film offers have started to emerge more often lately in Europe, which is the region offering by far the most attractive netback. While prices are still not attractive enough both in the locally-held and import markets, the pressure is expected to mount in Q1 2022. US HDPE film offers stood at €1550-1600/ton DDP, 60 days, while LDPE and LLDPE offers were respectively at €1780-1800/ton and 1560/ton, with delivery between January and late February.
According to statistics, overall US PE exports shrank 17% on year in January-October 2021 as a result of the heavily disrupted production. Nearby destinations including Canada, Mexico and Brazil were the only routes the US ramped up exports this year while they lost considerable market share in China, Malaysia, Turkey and Singapore.
US PE exports to Europe were somewhat different, statistics reveal. They slid 3% on year to Belgium, although Belgium still stood as the third major destination with more than 655,000 tons after Mexico and Canada. PE exports were up 11% to Spain and by 9% to the UK on year whereas down by 21% to Italy.
A competition among sellers seems inevitable as Europe is bracing for more US PE cargoes starting from February-March, barring disruptions to production and port operations. Plus, freight rates from the US to Europe are not too high to stem US PE flow, as in the routes from China to the rest of the world.
A spate of turnarounds within the bloc may take the edge off the pressure from rising supplies during Q1 2022, argued some sources.
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