PE markets in Asia divided by high costs and cautious demand

In line with the recent rally in upstream markets, spot PE markets in Asia have regained some strength over the past week, as per Chemorbis. However, sellers offering at the upper end of the ranges continue to complain of slow sales as demand has not picked up in proportion with rising costs. This week, spot PE prices in the local and the import market regained some lost ground in China, as traders and distributors nominated higher offers to test the market response after crude oil prices breached US$86/barrel early in the week. PE sellers gained further support from the spot ethylene market, where prices gained US$55/ton over last week, following the upsurge in crude oil prices. Aided by the rise in upstream costs, the low end of the price ranges firmed up by US$20-30/ton in the import market and by CNY100-200/ton (US$15-29/ton) in the local market. However, these increases were not replicated at the upper ends of the range, where prices were steady or only slightly firmer as feedstock increases did not prompt a similar rise in demand. An overseas producer offering LLDPE film at the upper end of the range reported conceding to discounts of US$20/ton to conclude deals this week. In Southeast Asia, both import and local PE prices continued to move lower this week due to a lack of buying interest. While firmer upstream costs provided some support to prices on the lower end of the range, import prices declined US$20-40/ton at the upper ends this week. Towards the end of the week, news of firmer prices in China and rising upstream costs led some sellers to withdraw prices offered at the lower end of the range in anticipation of a price correction. Converters in both China and Southeast Asia said that they are currently holding a cautious attitude to the market on concerns that the market may become oversupplied soon as capacities come onstream in Middle East, Asia and China.
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