Vietnam’s PE market extends losses into June on frail demand
Apart from the lack of support from the demand side; several other factors including the bearish PE market in China, retreating spot ethylene prices in Asia and the sharp fall in the energy complex have also reinforced the downtrend in Vietnam’s PE market.
Buyers stay on sidelines amid rising trade war
PE buyers have been adopting a wait and see stance ever since the trade tensions between China and the US re-escalated in early May. This has pushed sellers to lower their PE offers to the country in order to attract buying interest.
A South Korean producer decreased its HDPE film offers to Vietnam further by $20/ton on the week; citing persistently weak demand in the midst of the growing concerns about the intensifying trade war.
Bearish PE trend in China pressures Vietnamese market
China’s PE market has been on a bearish path since the second half of April in the face of the ongoing abundance in polyolefin supplies inside the country along with the weak buying sentiment.
The ongoing decreases in China’s PE market have put further pressure on all PE markets across Southeast Asia, including Vietnam.
Spot ethylene loses %8 in past two weeks
ChemOrbis Price Wizard suggests that the weekly average of spot ethylene prices on CFR Far East Asia basis has lost 8% since the second half of May. Ample supplies, plunging crude oil futures and scant demand were cited as factors dragging down spot ethylene prices.
“Now that the spot ethylene prices continue their downtrend in Asia, we think that polyethylene prices will lose further ground in the days ahead,” a trader commented.
Oil hits nearly 5-month low
ChemOrbis data also indicate that the weekly average of WTI crude oil futures has plunged to its lowest level since mid-January.
The escalating trade issues between the US and Mexico, the seemingly endless trade war between China and the US along with concerns of an economic slowdown in China exerted downward pressure on oil prices.
Players: PE prices have more room to fall
The PE market is signaling a weak outlook for June as many players are voicing their expectations of seeing additional decreases in prices in the face of the aforementioned bearish factors.
“The current downtrend in PE prices may remain in place until the end of June. Not only the uncertainty in the China-US trade tensions and frail demand but also the weakness in the upstream and energy costs support weak expectations in the market,” a few players opined.
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