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Vietnamese PE buyers hold off purchases on fears of further price pullback

by Abdul Hadhi - ahadhi@chemorbis.com
  • 27/04/2021 (10:58)
Vietnam has been leading the PE price downtrend in Southeast Asia, but purchasing volumes have started to thin even as some sellers show a reluctance to make offers.

A local trader commented late last week, “Some Saudi producers still haven’t revealed their offers for May. Maybe they will announce prices around the beginning of next week. Last week, one producer offered LLDPE and HDPE at $1290-1300/ton CIF, but buyers were not interested and so they are now holding their offers.”

He added, “We doubt if people will accept such high prices. Now, buyers worry that prices will have a sharp drop of around $100/ton and so they prefer to stay in wait and see.”

And this week, another domestic trader reported LLDPE and HDPE film offers at $1200/ton CIF but found that buyers may not accept it. “Especially now demand is not so good. Cambodia and Laos have locked their borders and so maybe, some converters can’t export their end-products to these two countries,” he explained. The two neighboring countries have locked their borders due to a surge in COVID-19 cases.

A converter said that he doesn’t plan on importing currently. “We expect prices can still drop further and so prefer to wait first and may replenish from the domestic market,” he said.

Import prices down for fourth week

The weak market mood has been underpinned by declining prices.

Import prices peaked in March after hitting multi-year highs. The weekly averages of prices have since declined for four weeks in a row with HDPE down 7.3% and LLDPE down 8%, according to ChemOrbis Price Index data.

Domestic prices have followed a similar trend with declines starting even earlier.

Since the downturn kicked off in mid-March, the weekly averages of local LLDPE and HDPE film prices on FD Vietnam, cash including VAT basis have lost a total of 9-10%, data also reveal.

Import – Local – FD Vietnam– CIF Vietnam – LLDPE

Other origins add to competitive re-export offers from China

Recent pressure on prices has come from Chinese sellers trying to clear large stocks by diverting imported cargoes to other regions, including Southeast Asia.

A trader explained that Chinese buyers had overbought PE cargoes from January to March. However, slowing regional demand for finished goods had led to reduced raw material procurement and resulted in a sharply higher inventory of such material, prompting Chinese suppliers to divert them to Southeast Asia.

Competitive offers of other origins have also been noted in the past week, with South Korean origin HDPE offered at $1180/ton and Indian origin LLDPE offered at $1200/ton - both on CIF basis.

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