Firm outlook in place for South East Asia’s PE market

Spot PE prices in Southeast Asia have gained over the past week due to limited regional availability, higher upstream costs and improving demand, as per Chemorbis. Most players expect prices to continue to firm up in the coming weeks as they believe that demand will receive an additional boost once Chinese buyers return following the National Day holidays. Import offers for HDPE and LLDPE film on a CIF SEA, cash equivalent basis both posted increases of US$45/ton on the lower end of the range this week as low end offers became increasingly scarce in the market, while import offers for LDPE film posted larger increases of US$20-60/ton on week over week basis. Price increases of US$13-85/ton for HDPE film, US$38/ton for LLDPE film and US$76-273/ton for LDPE film were recorded in Vietnam’s local market this week while producers offering at the lower end of the range for domestic material in Indonesia also reported announcing increases of around US$20/ton on their offers this week. The market was said to be more active this week as a number of traders and distributors are actively building up stocks ahead of the end of the Chinese National Day holidays. Converters were also actively purchasing cargoes this week out of concerns that prices may continue to move higher over the days ahead, although most converters commented that they are not willing to purchase in large quantities at the present. Limited regional supplies also pushed buyers to return to the market and secure their needs as a number of plants within the region are currently undergoing scheduled maintenance work. Malaysia’s Titan Petchem has shut its 667,000 tpa No. 2 cracker for a month-long shutdown, and is beginning three-week shutdowns at a 230,000 tpa LDPE plant and its 115,000 tpa HDPE plant in Tanjung Langsat to coincide with its cracker maintenance. Indonesia’s PT Titan’s 200,000 tpa LLDPE plant was also shut for maintenance work on September 24, with the shutdown scheduled to last three weeks. Tight domestic supplies pushed a number of buyers to conclude deals in Malaysia this week, in spite of the fact that sellers still consider demand in the country to be unsatisfactory. Players also pointed to stronger upstream feedstock costs as further support for their firm outlook on the PE market. Although spot ethylene prices have been mostly stable this week given the lack of trading activity in the Chinese market, energy prices have posted strong upward movements over the past week, with crude oil futures on the NYMEX gaining more than US$5/barrel week over week to move above the US$83/barrel mark for the first time since the beginning of May. Spot naphtha prices on a CFR Japan basis have also moved higher on the week, gaining US$45/ton to reach levels not seen since the first weeks of May.