NEWS

Tumbling currencies in Asia overshadow sellers’ search for bottom in PE prices

1 Aug, 2018


After being locked in a long-term downtrend, the import PE markets in China and Southeast Asia have witnessed further decreases in price announcements for August. Following the latest round of losses, some sellers have started to argue that the market should be near the bottom given the prolonged downward trend. However, such expectations have been mostly overshadowed by lingering currency risks so far.

According to weekly average data on ChemOrbis Price Index, LLDPE film prices on CIF China/SEA basis have recently hit their lowest levels since July 2017 while HDPE film has retreated to seven-month low. Southeast Asia’s import LDPE film market, meanwhile, has reached to its two-year low.

Import PE prices in Asia have been weighed down by several factors for the past weeks, including weak demand amidst the seasonal lull and the depreciation of local currencies given mounting trade tensions between China and the US. The downturn of spot ethylene prices as well as competitively-priced Indian and US PE origins have also put pressure on the market recently.

On the other hand, the recent gains in China’s futures markets, slightly limited supplies for LLDPE and HDPE as well as expectations of seeing better demand from August onwards have encouraged some sellers to think that prices should bottom out soon.

Some players believe that the market may recover in light of the aforementioned supportive factors while others prefer to remain skeptical considering the uncertainty related to the trade tension.

In China, a trader opined, “We expect firmer LLDPE futures and slightly better demand in August to support the sentiment. However, the depreciation of the yuan continues to put pressure on the market.”

Chinese yuan slumped to a 13-month low against the US dollar on Monday in line with market expectations that there is further room for the yuan to fall in the midst of worsening US-China trade relations.

In Southeast Asia, where local currencies also suffered from the trade war, a Philippine converter noted, “There a lot of competitive Indian and US LLDPE offers in the market. However, buyers are not interested in making import purchases in order to avoid risks associated with the depreciating peso.”

Meanwhile, a converter in Indonesia said, “We heard that PE offers are standing at quite low levels now. We think that it may be better to source some cargoes if prices are really bottoming out.” 

A Singaporean trader also commented, “We have managed to sell a good amount of LLDPE for August shipment. We think that LLDPE prices have almost bottomed out and we will not be surprised if we sell out our LLDPE allocation. We expect to see better demand in August given the upcoming year-end preparations.”

 

Contributed by:
https://www.chemorbis.com/en/

TALK TO US

ADDRESS

Malaysian Petrochemicals Association (MPA)
Wisma FMM, No. 3, Persiaran Dagang, PJU 9,
Bandar Sri Damansara, 52200 Kuala Lumpur

Tel: +603-2171 3456 / +603-2171 3521
Fax: 03-2171-3535

Facebook Icon Youtube Icon

ENQUIRY FORM