Middle Eastern producers lower PP, PE prices for November to SE Asia

Following the trends of November reductions adopted by producers from Southeast Asia, Middle Eastern producers have started to reveal lower November PP and PE prices to the region this week, as per ChemOrbis. The latest price cuts were attributed to cautious buying activities, slower than expected demand from the nearby Chinese market as well as weak upstream costs. Last week, spot ethylene prices posted three digit decreases both on an FOB South Korea and CFR Southeast Asia basis. Increasing operating rates at crackers were cited as the main reason behind weaker ethylene costs as rising supply levels amidst slow demand is seen exerting downward pressure on prices. A Saudi Arabian producer reported lowering prices by US$50/ton for LLDPE c4 film and by US$60/ton for HDPE film when compared to October. In the PP market, the producer announced decreases of US$20-40/ton for homo-PP, US$70/ton for PP block copolymer and US$30/ton for BOPP. A producer source commented, “Buyers may show resistance to our prices, but we don’t think that they are holding high stocks for now. Meanwhile, the Chinese market is not doing well these days and homo PP and LLDPE futures are still weak. Therefore, the market still has some room to move lower.” The source stated that their availability is not ample due to production issues at their plant. Another producer from the region announced prices for November shipment with decreases of US$10-20/ton for HDPE film and blow moulding and by US$20-30/ton for LLDPE c4 film when compared to October levels. “The gap between China and Southeast Asia is wide so we may face difficulty in concluding deals this month. Weaker ethylene in Southeast Asia is exerting downward pressure on the regional producers. Buyers are taking a wait and see stance for now and we are now monitoring the market before deciding on our next move. We are not optimistic about the short term outlook,” a source from the producer said. According to a trader in Singapore, another Saudi producer reduced their November PP prices by US$30-40/ton. The seller commented, “The market is quiet for now, but demand may pick up after more producers announce their November prices in the upcoming days. We expect some buyers to return to the market to make new purchases and they may negotiate to obtain even lower prices.” According to ChemOrbis, a trader in Vietnam reported receiving lower PE offers from a different Saudi producer and added that the supplier is willing to give additional discounts of US$10/ton when concluding deals. “We are still unsure whether to make new purchases or not considering the sharp fall in spot ethylene prices in Asia. In addition, the Chinese market is not performing well. We are planning to observe the market a bit longer,” the seller said.