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The Asian ethylene market was on a rising wave since the market returning from the Lunar New Year holiday at the beginning of February on the back of tight supply and healthy demand from Chinese buyers. However, the sentiment loses steam and ethylene prices plunged $110-130/ton compared to the peak recorded late February.

The near term market outlook for ethylene is not very promising, sources said, citing the ample spot availability and lower operation rate at downstream plants due to negative margins. Naturally, PE buyers in Southeast Asia are actively concern about the development and started adopting a more cautious stance when it comes to fresh purchases. 

However, this does not stop suppliers from implementing firmer stance on the import PE cargoes, all thanks to the strong purchasing appetite in the near-by China market.

Import offers for PE to China mostly firmer this week; with LLDPE and LDPE film see the sharpest increases. Data from CommoPlast suggests a $20-30/ton hike for these two grades while HDPE film remains largely unchanged.

Improving demand from the agricultural film sector has encouraged more aggressive replenishment activities from the import ground, sources said. A healthy number of transactions for LLDPE and LDPE film are observed this week. In fact, a major Thailand producer reportedly sold more than 10,000 tons of LLDPE film to China after lifting prices by $10/ton to $1110/ton CFR term. Buyers claimed that this cargo is rather competitive given the import duty exemption while Middle Eastern suppliers are not having quantity.

“We have accepted Indian LLDPE film at $1060/ton CFR China. Demand is there but buyers would become less urge to take in cargoes if ethylene costs continue to decline,” a trader commented. 

China has been showing strong demand for LLDPE throughout 2018. Import statistics indicated 45% increased in LLDPE arrival in 2018 compared to 2017 to about 4.376 million tons. This trend might persist in 2019 looking at the current market development.  

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