US PE offers back in the game in global markets
Now that American cargos have started to find their way back to some outlets after a prolonged absence, the question is: will they change the game in PE markets ahead of the year end?
What has changed in the US PE market?
Demand has tapered off at home while improving supply levels have started to weigh on prices. This has prompted US suppliers to focus more on export destinations, which provide quite favorable profit margins amid multi-year high prices and reasonable freight rates from the US. PE markets in Europe, Asia, Turkey and the Middle East have been facing a rally amid the energy crisis and persistent supply tightness.
Definitely it is not the start of a downtrend, but …
US offers are not widely offered and do not appear very competitive for the moment, as they mostly match the prevailing offers for Middle Eastern cargos. Although players think that these sporadic offers are far from triggering a downtrend amidst many other bullish factors they do not rule out the possibility of a pressure from American PE on markets later in Q4.
US LDPE in China
US LDPE was heard at $1650/ton CFR China in the post-holiday period, although the level was not confirmed by the wider market at the time of press. This is compared to the current Middle Eastern LDPE offers between $1620-1650/ton in the country.
China has been grappling with a severe energy crisis, which not only led to lower domestic supplies but also pushed futures markets notably higher. Import LDPE film prices have posted hikes of around $120-150/ton when compared to the last working week before the Golden Week holiday, which was celebrated on October 1-7, and have hit their highest levels since August 2014, according to ChemOrbis Price Wizard. HDPE film offers have also risen by around $40-50/ton so far this week.
US LDPE, LLDPE and HDPE offers across SEA
Players in Southeast Asia have also confirmed American PE offers in Vietnam and Malaysia so far this week.
In Vietnam, US LLDPE film showed up at $1340-1360/ton CIF, $10-20/ton below the prevailing high end for Saudi Arabian cargos. American HDPE b/m showed up at $1230/ton with the same terms, while Saudi Arabian offers stood at $1200-1250/ton. A manufacturer in Vietnam said he prefers to take a "wait and see" stance for the time being amid his existing stocks.
In Malaysia, US LDPE was confirmed at $1210/ton CIF, which corresponds to the high end of the overall import market.
US LDPE, LLDPE offers in Turkey
Turkish players have also been reporting US LDPE and LLDPE offers since last week, albeit for limited volumes. A PE consumer who was offered some volumes for October shipments said, “These cargos may even arrive earlier than Middle Eastern cargos.”
Similar to the reports in Southeast Asia, these prices were mostly in line with October Middle Eastern ranges. Accordingly, American LDPE and LLDPE prices stood respectively at $1740-1760/ton and $1550-1570/ton CIF Turkey, with no deals at the time of press.
A trader opined, “Reasonable shipping costs from the US to Turkey have driven fresh prices from the country as freight hovers around $60/ton. Nonetheless, we find US cargos risky as some of them are for December-January arrival. Moreover, they provide low margins.”
US LLDPE offered in Europe
Last week, US LLDPE C4 film was offered with €70/ton increases from September at €1520/ton ($1756/ton) DDP Italy, with delivery in November, which corresponded to the low end of the spot market.
Players are wondering whether or not US PE will be heard more frequently in Europe towards year-end, considering the fact that the region is offering one of the highest netbacks across the board. LDPE prices are at their all-time highs in Europe, according to ChemOrbis Price Index.
Soaring power costs as well as a lack of import cargos are giving an upper hand to sellers, while buyers find hike requests moot given the already inflated price levels.
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