Shutdowns tightened HDPE supply in Asia

Players in Asia have been reporting a general tightening supply for HDPE in recent weeks, stemming from a series of major plant shutdown. Though this condition has yet to support any drastic rebound in prices, however, the previous lower end is gradually disappearing.

The following table showed the shutdown schedules at regional and overseas plants, from who offers become scarce these days.

Chinese players have accepted import HDPE film cargoes from Asian suppliers at the range $1115-1120/ton CFR China, LC 90 days, citing difficulties in locating available cargoes. A buyer purchased Taiwanese HDPE film at $1115/ton wit the same term said, “The supplier is delaying in providing the documentation and we fear that this shipment might be canceled. Domestic inventories are falling faster than expected despite market is in the traditional slow season. We therefore, expect prices to hold firm in the near term.” It is reported that total PP and PE inventories at domestic major producers’ warehouses are at approximate 600,000 tons, which is way below the normal levels, causing a general tightness. This support the fact that deals levels reported in China is higher than in Southeast Asia.

Southeast Asian buyers have yet to be active in searching for material since demand in most domestic markets within the region remains weak. However, sellers have not opened any offers, claiming lack of quantity. A major Thailand producer said, “Due to the unexpected shutdown earlier this month, we are not having sufficient export allocation for both July and August. Temporary, we are not offering to wait for confirmation from the production side.”

A Saudi Arabia producer also informed about reduced export allocation for August stemming from the recent shutdown. An international trader offered on behalf of the maker added, “Few Vietnamese buyers sent in purchased inquiries last week, however our principal supplier only able to fulfill 99 tons of HDPE blow molding, other grades are not available.”

The situation in contrast, is not very bright in Indonesia as major domestic producers and trader slashed local prices, making import cargoes less competitive. “At the moment, buyers are not attracted to the import market, mostly due to competitive local materials and slow end product businesses. Yet, we do expect the situation to improve in the coming month,” an Indonesian buyer commented.