Asian PE prices dip amid sluggish demand and retreating upstream costs

Players in China and Southeast Asia report lower PE prices as demand remains slower than sellers expectations amid retreating upstream costs, as per ChemOrbis. On Tuesday, Brent crude oil prices dropped to reach their lowest levels since 2010 while Nymex crude fell to its lowest level since 2012 following the release of a report from the International Energy Agency (IEA) predicting that in 2014, demand for crude oil would expand by its slowest pace since 2009. Spot naphtha prices in Asia as well as Europe have also posted steep declines recently, falling to their lowest levels since 2010. A trader based in Vietnam reported concluding October deals with US$10/ton decreases for Malaysian LDPE film and US$40/ton decreases for Saudi Arabian LLDPE film when compared with the initial offers received for the month. “We are not seeing very strong demand from the local market these days. We think that prices still have some room to move down, but we decided to replenish as our stocks were running a bit low,” the trader said. Another Vietnamese trader reported receiving LLDPE film offers for a Saudi Arabian origin re-exported from China. “We are in no rush to purchase, as most converters are buying need-based as they are not confident about the market outlook,” the trader commented. A Thai producer stated to have lowered their offers for HDPE film, injection and blow moulding by US$35-40/ton to Vietnam. “Prices are facing some downwards pressure as falling upstream costs are encouraging buyers to stick to the sidelines, resulting in limited trading activity,” a producer source stated. PE prices also witnessed some week over week declines in the Chinese market. A trader based in Xiamen reported receiving an attractively-priced offer for Iranian LLDPE film on a CFR, 90 days deferred payment basis while adding that they also received some attractive offers for Middle Eastern LLDPE film. “The domestic market has softened while energy costs have also moved lower and we believe that these factors are putting some downward pressure on import prices,” the trader commented. According to ChemOrbis, another trader reported concluding deals for Iranian LDPE and HDPE film with decreases of around US$10-20/ton to China. “We hear that several traders are facing sales pressure and this is pushing them to give very competitive prices in order to speed up their sales. Our suppliers are only able to offer limited quotas to China due to some plant issues, so we are in no rush to agree to additional discounts these days,” the trader stated.