Asian PE producers unlikely to achieve price hike targets for May

Finding support from higher ethylene feedstock costs, Asian regional producers have announced significant increases on May PE offers to both China and Southeast Asia, as per Chemorbis. However, these new offers have met buyer’s resistance, who anticipate the impact of new capacities very shortly, pushing prices lower by the beginning of the summer. Hence buyers are restricting purchases to the minimum amounts, while traders are in no rush to rebuild their stock levels as they wait and watch market developments for a longer time before making their next moves. Reluctance of converters and traders to accept producers’ newest price targets has generated a considerable gap between the producer price level and the highest offers reported on the traders’ side. In China, the high ends of the import ranges for both HDPE and LDPE film have spiked US$70/ton over the past two weeks in response to higher May offers from major Asian producers. However, the low ends of the import ranges for these products have risen by only US$20/ton over the same period and few traders have been willing to match the producers’ most recent increases. When comparing the high ends of the CFR price range with the high ends of the ranges for prompt materials from the bonded warehouses, the high end of the CFR price range for LDPE film stands US$70/ton above the high end of the bonded warehouse range, while the high end of the CFR range for HDPE film carries an US$80/ton premium over the highest offer level reported in the bonded warehouse. In Southeast Asia, producers have also nominated large increases on May offers, while buyers and traders are unwilling to accept these new offer levels. A Thai producer reported to have concluded some deals at new offer levels for HDPE film, which stand about US$40/ton above their mid-April offer levels, although the highest done deal price reported from traders stands US$40/ton below the producer’s new price level. In the LLDPE film market, producers offering at the high end of the range acknowledge that they have not yet been able to conclude any deals at their new price levels, while the highest done deal levels reported from traders stand US$30-60/ton below the high end of the producer price level.
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