September shipment PE offers from Asia, Middle East unlikely to get climb as crude weakens

26-Aug-10

Persistently weakening crude oil prices over the past week could hamper Asian and Middle Eastern producers’ efforts to raise polyethylene (PE) prices for September shipments, as per ICIS. Weakening oil prices could fuel strong buyer resistance to the proposed hikes because regional PE importers typically keep away from the market when crude oil values dip. Most Middle East producers have refrained from announcing September, as their counterparts in Northeast and Southeast Asia had been testing the market by offering film grade high density PE (HDPE) at US$1200-1210/ton CFR China for September shipment, which were about US$40/ton higher than last week’s discussion levels. Film grade HDPE was assessed at US$1120-1170/ton CFR China and US$1140-1170/ton CFR SE Asia for the week ended 20 August. September HDPE offers have attracted limited buying interest as buyers expect PE prices to fall in tandem, with crude oil. Many Northeast Asian producers had been offering film grade linear low density PE (LLDPE) at US$1200-1220/tonne CFR China since last week for September shipment. However, deals were cited at the low end of the range, which were unchanged from August transactions. Film grade LLDPE was assessed at US$1150-1200/ton CFR China and SE Asia for the week ended 20 August. However, Asian producers were expected to have fewer difficulties in raising prices for film grade LDPE as the supply of this grade had been tight in recent months due to planned and unscheduled plant shutdowns in Asia and the Middle East.