Over the past few weeks, Polyethylene prices have been on the rise in Asia amid tight supplies and higher upstream costs as per Chemorbis. Restricted avails, particularly for LLDPE film have been witnessed, as several major Asian producers claim to have no LLDPE to offer currently, as several buyers are raising complaints of a lack of availability. The tightness in LLDPE is already providing support to bullish market sentiment inside China, where many sellers report that they are feeling increasingly confident about the market direction owing to the strong upward movement observed in LLDPE futures prices over the past few days.
In China, two major overseas producers approached the market with their new January offers for HDPE film this week. Although both of typically announce their HDPE and LLDPE film offers simultaneously, both claim that they do not have any LLDPE film cargoes to offer at the present and therefore have not announced new prices. Some problems at a plant has led to reduced run rates at a Taiwanese producer’s LLDPE lines leasing to restricted avails of LLDPE film, while a Middle Eastern producer stated that they have no stocks to offer for the moment. Also this week, A South Korean producer announced their initial January LLDPE film offers with an increase of US$40-50/ton from December, bringing their new prices to US$1400/ton CFR China, cash. The producer cited bullish sentiment inside China as well as their limited allocation as support for their price hikes. Meanwhile, distributors in Vietnam are also raising complaints about the lack of availability for LLDPE film, with several distributors who have been away from the market for some time saying that they cannot locate any LLDPE film cargoes in the import market this week. These distributors say that they are looking to restock some import cargoes now as locally-held LLDPE stocks are running low in Vietnam, which was reflected in jump of US$34/ton this week, on the high end of the range for locally-held import LLDPE film cargoes, which now stands at US$1405-1514/ton FD Vietnam, cash inc VAT (US$1277-1376/ton without VAT). Elsewhere in Southeast Asia, an Indonesian producer reported to have received a bid from a Chinese trader for LLDPE film at US$1390/ton FOB Indonesia, cash. The producer, who has not been active in the market this week owing to the upcoming implementation of the ASEAN free trade agreement, said that they are currently considering whether or not to accept this bid price.
Players in Mediterranean markets have noted a growing disparity between the locally prevailing price levels and the new Asian spot prices. Although import prices in Egypt are firming up, the disparity remains considerable, with import LLDPE film offers reported at US$1245-1325/ton CIF Alexandria, Egypt, cash equivalent basis, whereas import offers to China stand at US$1330-1450/ton CFR China main port, cash. With such a large disparity separating LLDPE prices in the Mediterranean from those in Asia, many players are speculating about the possibility that some sellers may divert their cargoes to Asia to take advantage of the better demand and more attractive margins obtainable in that market.