The Asian price spread between high density polyethylene (HDPE) and ethylene feedstock turned negative on September 25, falling to -US$5/mt from parity a day before, due to the bearish PE market amid continued firm ethylene, Platts data showed. The Asian HDPE and ethylene spread started to narrow in mid-June -- when it was calculated at US$165/mt -- as tight ethylene supply rapidly pushed up the Asian ethylene market. Market sources said a series of steam cracker shutdowns in Asia triggered ethylene supply tightness, which has been keeping ethylene price high.
The CFR China film-grade HDPE price fell by US$5/mt from Wednesday to be assessed at US$1550/mt Thursday, while CFR Northeast Asia ethylene was assessed flat at US$1555/mt during the same period. It was the first time in eight months that the spread has been negative. The spread was calculated at -US$10/mt on January 21. Typically, PE producers need US$150/mt to break even. The spread between Asian ethylene and naphtha feedstock rose US$3.88/mt day on day to US$705.13/mt Wednesday, its highest level since February 1, 2007, when the spread was calculated at US$731.25/mt.
An arbitrage window from Europe to Asia is currently open for spot ethylene cargoes, and traders estimated that around 30,000 mt of ethylene would move from the West. But the Asian ethylene market was seen to remain stable despite the influx of deep sea materials as high freight cost kept offer prices of Europe-origin materials relatively high. On the other hand, the near-term outlook of Asian PE market was seen to be bearish in line with economic slowdown in China as well as early October holiday season there.
29-Sep-14 
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