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Tight supply drives HDPE, LLDPE gains in Southeast Asia

by Abdul Hadhi - ahadhi@chemorbis.com
  • 30/06/2020 (04:09)
Import prices of HDPE and LLDPE film in Southeast Asia are being boosted by tight supply in addition to support from high feedstock costs. Meanwhile, HDPE gains have outpaced LLDPE slightly this month.

“We have hiked offers for both HDPE and LLDPE amid tightening supply of both grades and also high feedstock costs of naphtha and ethylene which have led to higher production costs,” a source at a Middle Eastern producer said.

HDPE gains outpace LLDPE

Between the two products, gains have been higher for HDPE.

“Offers for HDPE have climbed by $20-30/ton as there is a shortage while LLDPE offers have been raised slightly higher,” a Singapore-based trader noted. Her comments were echoed by an end-product maker in Vietnam, who lamented about the high price for HDPE.

Despite both moving in tandem from $800/ton to $815/ton CIF SEA during the first week of June, HDPE prices have since moved up to $855/ton while LLDPE’s gains are slightly lower at $845/ton, according to ChemOrbis Price Index data.

Turnarounds have contributed to the tightening supply with PTT Global Chemical’s 300,000 tons/year HDPE unit at MapTa Phut in Thailand and Lotte Chemical Titan 335,000 tons/year HDPE unit at Johor in Malaysia are both on planned maintenance shutdowns among regional producers.

Meanwhile, PRefChem’s massive complex at Johor in Malaysia, which houses a 400,000 tons/year HDPE unit and a 350,000 tons/year LLDPE unit, is only due to restart in September after an extended shutdown due to a fire in March.

Ethylene provides feedstock support

PE prices in general have also received support from pricier ethylene feedstock, by allowing producers to pass on higher production costs to customers.

Ethylene prices have more than doubled from $355/ton in late April to $790/ton CFR SEA, and are at their highest since mid-November last year before the onset of the COVID-19 pandemic.

Naphtha prices have followed a similar trend, having also doubled from $190/ton to $383/ton CFR Japan over the same period.

Growing buyers’ resistance to price hikes

Beyond relative tightness of supply and high feedstock costs, suppliers have also hiked offers on growing expectations of a recovery in demand and pricing as more countries in the region ease COVID-19 related lockdowns.

However, buyers’ resistance has emerged due to the pace of price gains and the more gradual nature of the actual recovery.

“Southeast Asia demand has been picking up but there is resistance from buyers claiming they are not able to pass on the hikes to their downstream customers,” a source at a producer explained.

A Vietnam-based converter added, “Demand for our end products are quite weak as demand is poor for some industries making products such as floor wash bottles. Demand for clothes packaging is also reduced as textile factories don’t have much new orders.”
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