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US PE stabilizes in Turkey and SEA, buyers remain skeptical

by Merve Madakbaşı -
  • 13/12/2019 (04:19)
American PE has started to give signals of stabilization in global markets following sharp declines throughout the last quarter of 2019. Now, sellers appear reluctant to provide additional discounts after easing their stock pressure to some extent for December.

Nonetheless, buyers are taking a cautious approach towards sellers’ attempts to end the bearish run, pointing to the nearing start-up of more plants on the top of the existing capacities in the US. The nearing Christmas and China’s Lunar New Year holidays may keep global activity moderate, they argue.

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Talks for US HDPE and LLDPE below $750/ton CFR fade in Turkey

In H1 December, US LLDPE and HDPE prices in Turkey sank to their lowest levels since they started to be offered regularly to Turkey by the second half of 2018 . Rising capacities in the US as well as the trade war between the US and China have led to increased US supply in major PE markets including Turkey, Southeast Asia and Europe since then and pushed the prices in these regions down to a decade-low.

American HDPE film, b/m, inj. as well as LLDPE c4 film prices in Turkey posted cumulative decreases of around 30% from May to December, with 6% of it occurring just in the past one month.

This week, US PE prices followed a mostly steady trend, meanwhile, as traders are being adamant at their offer levels. “Our supplier has depleted its December stocks and already started to offer January shipments at slightly firmer prices,” reported an agent of a US producer.

A PE converter also said, “Traders are not that eager to cut their offers based on relatively less stock pressure. We were told that a large producer was already sold out for December and is handling its deliveries ahead of Christmas holidays.”

Not long ago, rumor had it that American LLDPE and HDPE moved even below the $750/ton threshold on CFR Turkey, subject to 6.5% duty basis. However, this market talk has faded recently. A player noted, “The $750/ton end became scarce in the last couple of days as aggressive prices are not valid for new shipments. We have started to hear the levels of $760-770/ton more often.”

Turkish buyers approach firming attempts with skepticism

However, buyers approach sellers’ attempts to end decreases with a pinch of salt. They argue that massive capacities coupled with the nearing start-ups of some other plants in the US will continue to weigh on the sentiment, unless demand substantially picks up in Turkey.

A trader also opined, “The recent firming attempts of US sources can be interpreted as an upward correction rather than a rebound.”

Players in SEA reported attempts for small PE hikes

A similar scene was valid in Southeast Asia, where US PE prices were mostly steady compared to last week. Players in the region even reported $10-20/ton hike attempts for Middle Eastern and American cargos under the shadow of discouraging buying appetite.

A packager in Vietnam said, “We don’t see an upturn much likely since activity is sluggish nowadays and most buyers keep their purchases hand to mouth amid fragile economy.”

A trader in Malaysia commented, “US mLLDPE prices were up by $10/ton, while our bid at $750/ton was rejected. Yet, HDPE and LLDPE offers were stable on the week. The market may not move up in case supply continues to exceed demand amid approaching holidays.”

According to data from ChemOrbis, US PE offers in Southeast Asia were down by 4-8% ($25-65/ton) during the last four weeks, depending on the product, while the cumulative decreases reach 27% since May 2019
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