Import PE stocks decline amid new capacity start ups in China - markets in uncertainty

06-Jul-10
Traders in China seem to have rid themselves of most of the excess stock levels that had been plaguing them over the past few weeks, giving import PE prices a boost at the lower end of the range, as per Chemorbis. However, news of the recent plant start-up in China led to ongoing uncertainty regarding the market outlook, while contributing to further price declines at the upper end of the price range. For the past few weeks, high stock levels with Chinese traders have been exerting steady downward pressure on import prices in China and elsewhere in Asia as these traders had suspended regular purchases with Asian and Middle Eastern suppliers while attempting to rid themselves of excess stocks by offering material to buyers elsewhere in Asia- traders in India and Southeast Asia had been receiving a steady supply of competitive ex-China cargoes. Much of these excess cargoes consisted of Iranian material, which proved harder to sell to buyers outside China owing to the sanctions against Iranian materials in many countries. Reports trickle in from Indian and Southeast Asian buyers of competitive ex-China offers for Iranian cargoes. China’s oversupply problems for Iranian material have also been eased by the ongoing shutdowns at Mehr Petrochemical, Arya Sasol and Marun Petrochemicals in Iran, which together have a capacity to produce 900,000 tpa of HDPE. While traders have had some success in mitigating their own oversupply problems and are now said to be resuming purchases from their normal suppliers, the recent start-up of new capacities inside China has complicate the supply-demand outlook for the Chinese PE market. Sinopec Zhenhai reportedly began commercial shipments from its 450,000 tpa PE plant at the end of June while Sinopec Tianjin’s new complex, which has 300,000 tpa of both HDPE and LLDPE capacity, began commercial production in May. Elsewhere in Asia, Indian Oil Company (IOC) began test runs at its new complex with a total PE production capacity of 650,000 tpa in May while Thailand’s PTT Chemical was expected to begin production at its new 300,000 tpa LDPE plant in mid-June.
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