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US PE exports to continue to dominate Q4 market outlook

by Merve Sezgün -
by Esra Ersöz -
  • 17/10/2019 (04:08)
The US already exported over 6 million tons of PE in the first eight months of 2019, almost catching last year’s total.

It is highly likely that the country’s total PE exports for this full year will show a notable increase from 2018 and rising supplies from the US will continue to weigh on global markets in the last quarter of the year.

US PE heads for Europe, SEA and Turkey

As PE exports from the US to China significantly contracted within the period due to the trade war, US suppliers increased exports to other outlets to compensate for their loss.

Since the trade war between the US and China kicked off last year, American LLDPE and HDPE offers have been showing up at competitive levels in Southeast Asia, Europe and Turkey.

Data reveal that within the country’s total PE exports in the January-August period, Mexico accounted for almost 15%, followed by Europe (around 13.5%), South America (around 13%) and Southeast Asia (around 12.5%). Turkey alone constituted almost 3% of overall exports in the first eight months of the year.

Competitive US prices contributed to 10-year-lows in Turkey, Asia and Europe

According to data from ChemOrbis Price Index, global PE markets have tracked a decreasing trend for the most part of this year and prices in Southeast Asia, Turkey and Europe reached a decade-low before they cautiously rebounded in the first half of September following the Aramco attacks.

Competitively-priced US PE was among the most important factors playing a role in pushing prices to their lowest levels since 2009. This factor is likely to remain effective for the last quarter of the year given the growing supply pressure.

Rebound after Aramco attacks was short-lived in PE markets

The attacks on Aramco’s oil fields in mid-September pushed oil prices up. Concerns about possible supply disruptions from the Middle East also propelled PE prices higher in Asia and Turkey. However, this rebound happened to be short-lived as Aramco resumed operations and fragile demand re-gained prominence to weigh on the markets.

Accordingly, US offers have come into play again. Players in Vietnam reported competitive US offers last week, standing $40-50/ton below the prevailing market level after a brief period of hike attempts. Likewise, US offers have recently edged lower in Turkey compared to two-three weeks ago, when sellers sought higher offers in a bid to renew confidence following consecutive months of bearishness.
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