PE prices track ethylene higher in SE Asia, likely to follow in China

Polyethylene prices in Southeast Asia’s local and regional markets have moved higher in the first week after the Chinese holidays, as sellers lifted their offers in response to escalating ethylene feedstock costs, as per Chemorbis. Although China’s PE market has opened post-holiday on a quiet note, players are nevertheless expecting to see higher import offers in the coming weeks as overseas producers will need to push through higher prices to cover their theoretical production costs based on spot ethylene prices. Spot ethylene prices gained US$20/ton CFR NE Asia over the past week and US$80/ton over the past month. This rise has not yet been reflected in spot PE prices, which have held largely stable over the past month in both China and Southeast Asia, leaving many overseas PE producers operating at prices well below their theoretical break-even levels. In China, import HDPE film offers at the high end of the range are still insufficient to cover producers’ theoretical production costs, while offers at the lower end of the range are actually below the prevailing offer levels for spot ethylene. This situation is likely to be rectified over the coming weeks as producers are expected to announce higher offer levels to restore acceptable operating margins. Import offers from traders this week are mostly unchanged from pre-holiday levels, as they await new offers from suppliers before deciding on their next moves. The low end of the import HDPE film offer range gained US$75/ton CFR NE Asia when compared with the week before the holidays in Southeast Asia, with further increases expected at the lower end of the range. Most import sellers have begun to concentrate offers at prices around US$70/ton higher than the current low end of the overall range. Local PE prices gained in India and Southeast Asia over the past week. An Indian producer raised their offers for both HDPE film and LLDPE film to the local market by INR2000/ton (US$44/ton) this week, with distributors reporting that they still find local offers to be more attractive than imports even after the most recent hikes. Distributors in Thailand and the Philippines reported raising their prices by around US$16-65/ton on the week in anticipation of seeing higher import offers in the days ahead. Local PE prices inside China have also held largely stable over the past month even in the face of steadily rising ethylene feedstock costs. Distributors in the country raised their LLDPE film prices by CNY100-200/ton (US$15-30/ton) this week in response to firmer LLDPE futures prices while sellers offering LDPE and HDPE film also indicated that they are mulling over announcing higher prices to the local market once more converters begin returning from the holidays later this month.
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