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SEA PP, PE stuck between supply disruptions and weak China

by ChemOrbis Editorial Team -
  • 10/03/2017 (04:50)
In Southeast Asia, PP and PE markets have been stuck between ongoing supply concerns that stem from reduced availability from the Middle East as well as regional shutdowns on one hand, and the weak outlook in China and re-exports from this country on the other hand.

Concerns about limited supplies from Middle Eastern producers have been widely pronounced in the Southeast Asia’s PP and PE markets since early February, which has come on top of the regional shutdowns. However, weak demand in China as well as ample supplies for both PP and PE pushed Chinese sellers to re-export their cargoes aggressively to Southeast Asian markets for the past two weeks as they aimed to deplete their stocks and obtain better netbacks.

Under the influence of these factors, the PP market has stabilized in Southeast Asia for the last two consecutive weeks after firming up since late January. The import PE market, meanwhile, has already felt the pressure from the nearby Chinese market by stepping back from the initially higher March levels this week.

An international trader opined, “Our customers are placing lower bids; however, we cannot accept them as Middle Eastern and regional PE producers are standing firm on their offers given limited supplies.”

However, an Indonesian trader commented, “Re-export cargoes are more competitive than the offers of Southeast Asian sellers.” A Vietnamese trader also noted, “Since China’s market is not doing well, more PP, PE cargoes are being re-exported to Vietnam at competitive levels.”

Accordingly, players are now questioning whether regional and overseas sellers’ supply-driven hike intentions might be shadowed in the upcoming term, particularly if the upstream markets see further declines.
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