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SEA PE uptrend intact, yet increases capped by reduced demand

by Merve Sezgün -
  • 16/07/2020 (04:07)
Import PE prices in Southeast Asia have extended their gains into the eleventh consecutive week as tight availability continues to support the upward trend. Regional and overseas suppliers approached the market with further increases this week, yet they confirmed that buyers’ resistance was still in place and keeping hike amounts in check.

“Several Southeast Asian producers are having plant issues, which keeps regional supply levels low. We have raised our HDPE film offers further by around $20-30/ton while LLDPE film has been able to see smaller gains. Buyers are reluctant to accept higher price levels. If the resistance continues, buying volumes would eventually drop,” a trader based in Singapore noted.

Buyers hope for price relief

On the converters’ side, there has been a struggle to pass on successive PE hikes to downstream customers.

“Demand in Southeast Asia has been picking up since the regional countries eased their coronavirus related lockdowns. However, buyers’ resistance has emerged due to the pace of price gains and the more gradual nature of the actual recovery. Most buyers are limiting their purchases to urgent needs nowadays,” a trader in Vietnam explained.

A few buyers in Malaysia and Indonesia lamented, “We are facing challenges in our end product sales as our customers are not accepting continual price hikes. We hope to see a price relief in the PE market. Hence we are refraining to purchase beyond our immediate needs for now.”

Meanwhile, a few players also reported that demand for HDPE has dropped due to Indonesia’s ban on single-use plastic bags in Jakarta.

HDPE and LDPE hit highest levels in almost a year

Data from ChemOrbis Price Index reveal that HDPE and LDPE film prices on CIF SEA basis have already regained more than what they had lost during the February-April period at the height of the COVID-19 crisis.

The weekly average of HDPE film prices, for instance, was standing at $870/ton CIF SEA right before the downturn kicked off in early February. It has increased around 29% since early May to be currently hovering around $940/ton, the highest level in almost a year.

LDPE film has gained about 17% since the uptrend started off in early May and the weekly average of prices has also hit a one-year high at $990/ton CIF SEA. In early February, it was standing at $965/ton with similar terms.

The import LLDPE film market, meanwhile, has climbed 25% during the uptrend and recently been back to its early February level of $900/ton CIF SEA.

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