Players divided over February PE outlook in SE Asia

Players in Southeast Asia are divided as to the likely direction of the market for February, with some buyers moving to top up their stocks in anticipation of further price increases in the weeks ahead while others are electing to remain on the sidelines in anticipation that demand will eventually prove to be insufficiently strong to support the recent increases announced by sellers, as per Chemorbis. Demand within the region has been better this month when compared with December, although players commented that trading activities are still a bit sluggish during the first month of the year. Most converters reported that they are seeing normal demand for their end products these days, although they complained that they are having a difficult time reflecting their rising raw material costs onto their end product prices. Demand has also picked up in India, where several distributors report that they have been building up stocks in anticipation of seeing higher prices in February. However, there is some concern about the demand outlook for the Chinese market, where an early January rally in the PE market fizzled out this week as the lack of buying interest blunted sellers’ optimism. Demand is not expected to see much improvement in China over the short term as many converters reported that they will begin wrapping up their business ahead of the Chinese New Year holidays soon. Import PE prices continued to firm up in Southeast Asia this week as regional producers are announcing increases on their offers because they wish to enter the Chinese New Year holidays on a firm note even if demand has not quite caught up with their new offer levels yet. The overall import ranges on a CIF SEA, cash basis moved up US$20-80/ton for LLDPE film and US$5-30/ton for HDPE film this week while the lower end of the overall LDPE film range posted a US$60/ton week over week increase. Done deals were reported towards the lower end of the overall ranges for all three products while sellers offering closer to the upper end of the ranges complained that their offers are not meeting with much interest from buyers. PE prices generally tracked a steady to firm trend in the region’s local markets over the past week. Domestic producers in Indonesia raised their LLDPE film offers by US$20/ton this week while a number of converters based in the country reported that they are planning to secure some HDPE film cargoes this week as they expect producers to announce higher HDPE film offers in the week ahead. In Thailand, offers for both HDPE film and LLDPE film firmed up by THB1000/ton (US$33/ton) this week. Distributors in Thailand reported that demand is doing better these days when compared with the end of December although most say that they are planning to deplete their existing stocks before making any additional purchases. In Malaysia, some January deals were reported this week with discounts from producers’ initial offer levels, which had been announced last week with decreases of MYR90/ton (US$29/ton) for LDPE and LLDPE film and rollovers for HDPE film. Demand remains sluggish inside Malaysia, with one distributor saying that that demand for HDPE film has been particularly disappointing due to the recent legislation banning plastic bag usage in some parts of North Malaysia.