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Global Polymers Pricing Analysis

A Platts.com Data Feature

LDPE: Asian producers mull cutting rates, selling feadstock; European spot prices stable

November 30, 2015 -- Staff Reports



US


The US low-density polyethylene export assessment increased $11/mt on the week, assessed November 25 at $1,179-$1,201/mt (53.5-54.5 cents/lb) FAS Houston.


Rail-car pricing from producers to traders was talked around 50.5-51.5 cents/lb, while bagged resin for export were heard in the 53.5-54.5 cents/lb range, amid talk of tightness in the market.


Trading sources indicated that export availability remained limited for LDPE and LLDPE grades.


"I have a small shipment for December that I will probably sell today and be done," a US-based trader said.


Market players in Latin America -- including key regions Peru and Brazil -- lamented the lack of availability from the US but said Asia-origin offers were quite competitive in contrast.


Analysis continues below...


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Traders in the US said LDPE was "tough to get," but were hopeful availability would increase in December.


Domestic contracts remained unsettled for November. October domestic contracts were assessed stable from September at 75-76 cents/lb ($1,653-$1,675/mt) for delivered rail cars.


Market players said a flat settlement was expected for November and also suggested that December would rollover as well.


Stable demand and commodity conditions are being targeted as reasons for a rollover, sources said, adding an increase of 5 cent/lb could be implemented in January.


ASIA/MIDDLE EAST


Asian low density polyethylene was assessed down $50/mt week on week at $1,075/mt CFR Far East Asia November 25 on weak demand.


End-users said demand for finished goods was weak and they were holding back from purchasing in a falling market.


Firm ethylene prices failed to lend support, and a few producers were mulling cutting PE production and selling off feedstock ethylene as both were around the same price.


Ethylene was assessed flat day on day at $1,055/mt CFR Northeast Asia November 25.


The weakness in the PE market looks set to continue into the second quarter of 2016 due on an extended demand lull due to bearish macroeconomics, observers said.


Global oil prices are expected to recover by Q3 2016, so petrochemicals including polymers should recover by then, they said.


Demand for polymers globally is expected to grow at 3-5% in 2016, most producers estimated.


Coal- and methanol-to-olefins startups in China are not expected to be as competitive as Middle East crackers as costs are high, Saudi Arabia's National Industrialization Co. (Tasnee) CEO said during GPCA late last week, adding CTO/MTO in China would not have been successful without substantial support from the government.


LATIN AMERICA


The import assessment for low-density polyethylene in Peru fell $45/mt on the week to $1,215-$1,225/mt CFR basis November 25 amid dull demand and competitive prices from Asia.


"Prices were stable, but the tense conditions around the world are making us even more cautious to buy," a Peru-based distributor said.


A US-based trader said that in order to make deals in Peru, LDPE prices cannot be higher than $1,220/mt CFR basis.


Despite tight availability in the US, Asian prices dropped on the week and less material was traded, sources in the region said.


On the week, prices from Asia were heard more competitive than US-origin resins, multiple sources  said.


In Brazil, LDPE price assessments fell $40/mt on November 25 at $1,225-$1,235/mt CFR basis amid competitive prices for Asia-origin material, sources said.


"PE prices in Brazil's domestic market remain very competitive. On top of that, demand is weak," a Brazil-based distributor said.


Sources reinforced that prices in the domestic Brazilian market were around $1,200-$1,250/mt delivered basis.


"Overall, import prices are higher than the domestic prices, so it does not make sense to import material. It is better to buy locally," the Brazil-based distributor said.


For exports from Brazil to Mercosur countries, assessments were stable week on week at $1,295-$1,305 FOT basis, as November offers from Brazil to the Mercosur region were unchanged, sources said.


In production news, operations at Braskem's ABC Petrochemicals Complex in Sao Paulo state resumed early the week of November 23 for the first time since a fire halted production more than a month ago, the company
said.


The restart process can take three to four days return to full capacity, a company spokeswoman said. In Argentina, Dow's LDPE production was still heard shut. Company confirmation was not available by time of publication.


EUROPE


European low density polyethylene spot prices remained stable this week as all eyes were fixed on the impending December ethylene contract price settlement.


Prices were assessed November 25 at Eur1,380/mt. One source said that demand was solid, order books have largely closed and that product availability was scarce.


Demand was solid on a seasonal pick-up in volumes in the run-up to the Christmas period, and also in anticipation of the holiday slowdown.


There were no new production issues reported this week. In the contract market, prices were assessed flat on the week at Eur1,490/mt; this is an increase of Eur30/mt on the month.


One source said that there were bullish contract price expectations for LDPE.


Spot European ethylene prices have reached a near-three month high following the outage of Shell's Moerdijk steam cracker in the Netherlands, according to sources.


Ethylene prices have soared $175.92/mt or 22% since the beginning of the month to $948/mt FD NWE on November 23.


On November 18, Shell said that repairs to the compressor unit at the Moerdijk cracker would last for four weeks. On the following day, there were five trades for December delivery.


LLDPE commentary: Ample supply in China; demand in Peru described as stable







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