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SE Asia’s polyolefin markets move up despite softening China

  • 28/11/2016 (03:33)
In Southeast Asia, import PP and PE markets were on bullish notes over the past week since a few regional and overseas producers approached the region with firmer prices for December despite a softening trend in China. This was also despite the fact that regional demand is considered to be unsupportive in the face of depreciating local currencies and slow end product businesses ahead of the approaching year end.

PE players attributed sellers’ firm pricing policies for December to the ongoing LDPE film tightness as well as the fact that China’s PE market has been hovering above the levels in Southeast Asia since the end of the National Day holidays. Although the Chinese LDPE film market lost more than half of its premium over Southeast Asia last week, it still offers better netbacks to sellers.

A regional trader noted, “LDPE film buyers in China are still willing to accept the levels around $1400/ton CIF. We think that this explains sellers’ firm stance to Southeast Asia which remains below this threshold.”

A Southeast Asian producer lifted their December PE prices to the region by $60/ton for LDPE film and by $10/ton for HDPE film while a second producer also applied a $10/ton hike on their HDPE film offers. A Middle Eastern producer was also reported to issue their December PE prices with increases of $30/ton for LLDPE and $10/ton for HDPE. A trader who received new offers stated, “We are not sure whether these producers will achieve smooth sales at their new levels as demand across the regional markets is sluggish.”

When it comes to PP, the scheduled maintenance shutdowns at several Southeast Asian plants kept the market on firm notes despite the fact that China’s import PP market witnessed a downward trend over the past week.

Two regional producers raised their PP offers to Indonesia by around $10-40/ton last week, citing their limited supplies. A Taiwanese producer also lifted their new PP offers to Southeast Asia by $40-70/ton from November and attributed their hike decision to a shutdown at their cracker.

Meanwhile, a few regional players questioned the sustainability of this firming PP trend, highlighting the lack of support from the demand side. In line with their argument, a domestic producer in Indonesia implemented a downward revision on their local PP prices last week despite a maintenance shutdown at their PP plant. A global trader also said, “We may consider conceding to giving discounts on our PP prices to Vietnam as demand is quite weak from the country.”
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