Asian PE sellers face stiff competition from Iran, Middle East

As demand recedes, Asia’s PE markets have witnessed significant declines over the past few weeks amid deteriorating economic conditions. As per Chemorbis, although major Asian producers have announced large price cuts on their June offers, sellers offering Iranian and Middle Eastern materials have been able to capture an increasing share of the scant buying interest by undercutting the general market level. One major Asian producer complained that the price cuts of US$100-150/ton on June offers for HDPE and LLDPE film had not been sufficient to generate much buying interest, and hence it is considering adoption of drastic measures to deal current economic difficulties. Among the steps the producer plans to take are limiting their production runs to produce as per what customers have already ordered while shifting their production from HDPE film to relatively less well-supplied products such as HDPE pipe and HDPE yarn. The producers have already managed to conclude deals for around 10,000 tons of both HDPE pipe and HDPE yarn for customers in Southeast Asia and Iran. In Southeast Asia, the low end of the overall import offer ranges for HDPE and LLDPE film declined US$100-125/ton on the week while the upper end witnessed much more moderate decreases of US$30-60/ton, with the lower end of the ranges consisting mainly of Iranian and Middle Eastern material. Mainstream Southeast Asian and Northeast Asian origins constituted the upper end of the range. In the HDPE film market, import offers were reported in a wide range this week, with the upper and lower ends of the range separated by a gap of US$200/ton. Although the overall offer range was wide, all done deals reported during the week were concluded within US$40/ton of the low end of the range, with the most attractive offer for an Asian origin standing US$110/ton above the highest reported done deal level. A similar picture emerges from the Chinese market, where the gap between the lower end of the overall range and the most attractively-priced offers for Asian origins stands at US$80/ton for LLDPE film and at US$90/ton for HDPE film. With buying interest across the country described as weak and many players anticipating further erosion in spot ethylene prices, there is also much concern on the part of mainstream Asian sellers as to how best to retain their market share in the face of aggressive competition from Iranian and Middle Eastern sellers, who find themselves in the best position to take advantage of the current market conditions.