Ethylene market riding lower, Asian PE buyers shy from purchases

The Asian ethylene market extended the weakening trend even with the return of Chinese buyers as continued improving supply condition weight down sentiment. Ethylene based on CFR Northeast Asia term fell $55/ton on 23 February 2018 to the lowest level in almost six months, storming the downstream PE market.  

It is reported that ethylene cargoes from Southeast Asian and Saudi Arabia are still available for first half of March loading while supply in Japan is relatively long despite heavy crackers maintenance shutdown starting March. Industry experts are expecting the downtrend to persist in the coming days.

The development has negatively impacted the sentiment in the downstream PE market, where conservative buyers take a more cautious stance, hoping to see some discounts to emerge. A Chinese buyer received fresh offers for Qatar PE at $1220/ton for LLDPE film and $1240/ton for LDPE film, all based on CFR China, LC 60 days term. The source added, “We managed to sell LLDPE film well in local ground, however refrain from taking import cargoes given the recent weakness in upstream market. We do expect to see a small reduction in PE offers in the near term.”

At the meantime, deep-seas HDPE film cargoes priced above the $1400/ton threshold are facing stiff resistance across Asia region and with ethylene costs might see additional decreases on the near term, it become tougher to attract buying interest even though supply for this grade remain limited. “We prefer to wait and see given the fact that prices are too high now. End product demand is slow,” a converter received offers for Kuwait HDPE film at $1410/ton CIF Vietnam, LC AS term said.