SE Asian players: Import PP, PE prices head for $900 CIF and below

Polyolefin markets in Southeast Asia have been weakening since mid-September, with the slump deepening in the past one month. Regional demand remains anemic, with downstream factory production continuing at reduced levels. Inventories have accumulated due to a slowdown in consumption. Producers are also facing added pressure to clear inventories as the year-end approaches.

Given the current circumstances, there is an anticipation of further price cuts, and players across the region expect import prices for both PE film and homo-PP to break below the $900/ton CIF threshold in the near future.

Prices below this threshold were last reported in mid-July for homo-PP raffia and mid-June for LDPE film. As per ChemOrbis Price Index data, HDPE and LLDPE film have not seen any levels below the $900/ton CIF SEA mark since August-September 2020.

Vietnam already sees PPH raffia at as low as $900 CIF

Early this week, both converters and traders in Vietnam reported that homo-PP raffia offers from South Korea dropped to as low as $900/ton CIF, cash.

“PP offers have remained on a stable to softer note, with a very limited number of deals concluded. Our South Korean supplier has reduced their offers by $20/ton this week. There is a prevailing expectation that prices might experience further declines due to lower crude oil prices and subdued demand. As the year approaches its end, the demand weakens even more, with many converters reporting a lack of new orders from customers,” a converter noted.

LLDPE film dips below $950; HD and LD above $1000 face lack of interest

The region’s PE markets have also retained the downslide given sluggish demand, while supply limitations for both HDPE and LDPE film have failed to prop up prices another week in the face of lack of buying enthusiasm.

The low end of the overall LLDPE film price range has broken below the $950/ton CIF mark in line with the emergence of some competitive US shipments at $920/ton CIF Malaysia, cash. Offers from other origins are currently quoted at $940-1010/ton CIF SEA, cash, with the low end formed by an offer for Indian LLDPE film and the high-end hosting South Korean offers. Middle Eastern origins stand at $950-990/ton within the range.

As for LDPE and HDPE film, this week has seen prices above the $1000/ton mark become increasingly rare in the market, since only limited buying power appears to happen at the lower ends of the ranges. Market players have reported the lowest level so far at $970/ton CIF for LDPE and HDPE film, with both being Middle Eastern shipments.

A regional representative of a Mid-Eastern producer said, “LLDPE is facing challenges due to an imbalance in supply and demand, resulting in lower prices compared to LDPE and HDPE.Current demand is sluggish, particularly as the year-end approaches, leading to reduced spending. Amid the market’s downward trend, there is a prevailing inclination among businesses to adopt a wait-and-see approach. Orders for year-end goods have decreased, prompting converters to operate at lower capacities. As contract renewals and negotiations are underway, buyers are likely to wait until all contracts are settled before deciding to replenish. Consequently, the market may remain subdued until January.”

Recovery hopes pinned on Q1 2024 and beyond

Most players in Asia consider a recovery in PE and PP prices as a distant prospect for the near term primarily due to persistently sluggish demand. A lack of meaningful cost support from energy and monomer prices has recently exacerbated these bearish views, meanwhile.

“A combination of the year-end lull and the onset of the low winter season in the Northern Hemisphere may keep the polyolefin downtrend intact in December. PE supply from the US may increase, adding further pressure to the markets as new capacities have come into play and production issues have been resolved. Plus, US PE producers may engage in traditional depleting activities towards the end of the year,” commented a regional trader.

A source from a South Korean producer also noted, “There is anticipation that a price recovery might take place in the first quarter of 2024, driven by potential regional demand recovery, supporting higher polyolefins prices across Southeast Asia and China. But until Q1, we are likely to see a continuing erosion in price levels.”