Polyethylene prices continue to slide despite firmer ethylene in SE Asia

17-Dec-15

Players in Southeast Asia report that PE prices continued to decline even as spot ethylene costs firmed up, pushing import prices for HDPE and LLDPE film close to par with ethylene in the region, according to data from ChemOrbis Price Index. Spot ethylene prices on a CFR Northeast Asia basis have been steadily gaining ground since mid-September, posting a cumulative gain of around US$280/ton according to ChemOrbis Price Wizard. These gains have come even as derivative prices and energy costs softened. Over the same period, prices for polymers on CFR SEA basis fell 3.5% for LLDPE and HDPE film, 5.4% for PVC and 8.2% for GPPS. The rise in ethylene prices was also out of step with the prevailing upstream trends, which saw NYMEX crude futures decline by more than 20% while spot naphtha prices on a CFR Japan basis lost 4.3% over the same period. Traders in the region attributed the persistent firmness in spot ethylene prices to tight supplies stemming from a number of shutdowns across the region, adding that the recent unexpected shutdown and force majeure from Shell’s 960,000 tpa cracker in Singapore has exacerbated tightness in the spot market. However, traders also acknowledged that downstream customers are complaining as steadily rising ethylene costs have impaired margins for non-integrated derivative producers. A plastic bag manufacturer in Vietnam reported receiving new January prices for LLDPE and HDPE film from a Saudi Arabian supplier with US$70/ton decreases from the most recent offers they received from the supplier in spite of firmer ethylene costs, according to ChemOrbis. “While spot ethylene remains firm, we believe that sufficient supplies and limited demand will continue to push down PE prices. We only purchased a few containers last month and we are happy to report that we will not suffer any major loss stemming from the sharp decline in our raw material costs,” the buyer stated.