Initial Middle Eastern PE prices for August surface in Turkey and China

New August PE offers and sell ideas from Middle Eastern suppliers started to be voiced in global markets including Turkey and China, as per ChemOrbis. Despite of the softer spot ethylene costs in Asia, most announcements indicate increases over the last July levels on the back of globally limited PE supplies for certain grades and higher spot naphtha costs driven by gains in crude oil prices in July. Buyers in Turkey reported receiving initial August PE prices with rollovers to US$10/ton hikes, while regional producers seek US$10-30/ton increases in China citing tight LDPE and LLDPE availability. Two packaging converters in Turkey received new PE prices from a major Middle Eastern producer. “Our regular supplier rolled over their LLDPE c4 film prices for August. The market may hover at around the prevailing levels in the upcoming days,” a buyer stated. A second buyer was offered US$10/ton increases for LLDPE c4 film and HDPE film and was set to resist these newly announced levels from the producer. “Although the exchange rate started to back off, it had risen for a quite long time. Now we have to minimize our previous losses stemming from the high US dollar and we will try hard to obtain rollovers from our supplier,” he noted. A different Middle Eastern source expressed their August sell ideas with rollovers for LDPE film and US$10-20/ton increases for LLDPE c4 film month over month. “Our principal may push for a larger increase, but the market will not accept more than a US$20/ton hike,” a supplier source said. “Middle Eastern sellers in Turkey are under pressure from competitively priced Iranian cargoes,” he further commented. A trader mentioned, “Demand in Turkey is not supportive of any price hikes for August. Prices will be stable at the start of August but import prices may hopefully see some discounts towards the end of the month. On the other hand, Turkey is not carrying its usual premium over China which shows that prices in Turkey are not under any downwards pressure from global markets.” Regional producers continued to return with new increase targets to China after a Middle Eastern producer pioneered hikes last week. A Middle Eastern producer who initially issued US$10/ton hikes for August LDPE and LLDPE offers last week implemented additional increases of US$30/ton and US$10-20/ton, respectively for these products given limited supplies from the Middle East during Ramadan. A producer source said, “We managed to conclude some deals at our new offers thanks to firming local prices and insufficient import cargos in the market. Prices may remain firm over the near term despite soft oil prices and buyers will accept higher levels gradually albeit for small purchases.” He also thinks that supplies will remain insufficient over the near term due to the unexpected shutdown at Thai PTT. The producer had to implement an extended shutdown at one of their LDPE plants with 300,000 tpa capacity following a technical issue. Another Middle Eastern supplier started to ask for US$10/ton hikes for HDPE film and US$20/ton for LLDPE film for August blaming high energy costs, firming local prices and price hikes from other counterparts. "We feel free from stock pressure as we have already achieved some deals at our new offer levels thanks to rising local prices. Our overall supplies remain insufficient with respect to our usual levels," a source at the producer stated. A trader offering on behalf of a Middle Eastern supplier also reported that they aim to obtain US$30/ton increases for LLDPE c4 film and US$20/ton hikes for HDPE film from July. “We can still only sell to our regular customers and at previously agreed prices though. They only accepted to purchase very small volumes at our new offers. Nevertheless, we will not make any price adjustments over the near term believing that buyers will gradually accept higher offers,” a producer source noted. Although some increases have passed, buyers in China are resisting higher levels pointing to stabilizing energy prices and lower spot ethylene costs. LDPE and LLDPE prices may see some further slight firming in the days to come owing to tightness, players expect, although the HDPE film market may hold steady. In upstream news, crude oil futures on Nymex posted relentless gains since the second week of July before fluctuating up and down this week according to ChemOrbis. Futures contracts still closed Wednesday above the US$105/barrel threshold to represent a gain of more than US$7/barrel from the beginning of July. Spot ethylene costs declined US$40/ton on CFR Northeast Asia basis since July started while naphtha costs soared US$50/ton on CFR Japan basis in the period.