Print

After several Middle Eastern producers announced December delivery PE offers to Vietnam at stable to firmer levels compared to last month, buyers here are negotiating very hard for discount before concluding deals. Apparently, weak demand and trader’s inability to lift domestic prices despite falling local currency against the US dollar have discouraged buyers from committing to fresh purchases.

A trader received $20-30/ton discount from initial offers on Saudi Arabia’s LLDPE film, reaching $1190/ton CIF Vietnam, LC AS term said, “We decided to skip making purchases this month as it is too risky. Looking at China market and ethylene costs, we think the Southeast Asian PE sector shall witness correction soon. However, our supplier is still holding very firm stance on their cargoes.” A number of other buyers have also expressed their unwillingness to make refresh purchases, claiming high prices amid sluggish local demand. Buy ideas for Middle Eastern LLDPE film stand at the range $1150-1160/ton levels.   

Meanwhile, another trader who received $30-40/ton discounts on Saudi’s cargoes at $1180/ton for LLDPE film and $1120/ton for HDPE film, CIF Vietnam, said, “We normally take about 300 tons from our supplier, however, this month we only purchased one container. We think this price is a little too high, considering the availability of USA cargoes at much more competitive levels. We have sufficient stock on hand, therefore, plan not to making large buy at current market levels.” The source reported to have purchased Thailand HDPE film at $1115/ton with the same term in the previous week.

Producers, in contrast, appear to have no pressure or urge to reduce prices, believing that demand shall pickup ahead of the Lunar New Year preparation. One of the Saudi producers informed, “We rollover HDPE film prices at $1150/ton while down adjusting LLDPE film prices by $10/ton from last month to $1210/ton to Southeast Asia. Respond from Vietnam is very poor, yet we are not in the position to commit to large reduction.”

This tug of war is expected to remain in place in the near term; however with weaker demand in key regional markets including China and India, the PE bear might therefore, hold stronger position, players said.