SINGAPORE (ICIS) – Southeast Asian Linear Low Density Polyethylene (LLDPE) import market price talks are on the verge of record low due to recent drop in oil prices crude and while virus control measures in some regions are hitting end user demand for PE resins.

During the week so far, bids and bids for dutiable LLDPE cargoes were $ 810-830 / tonne CFR (cost and freight) SE (Southeast) Asia, at the lower end of the range. valued by CIHI the previous week of $ 810-850 / tonne CFR Southeast Asia.

Towards the end of the week, these levels aroused little interest from buyers, who preferred to sit on the sidelines and wait for offers for April deliveries, which they anticipate to be sharply lower due to the drop. recent crude oil prices.

Crude prices rebounded overnight, supported by new US and EU stimulus packages, after plunging to its lowest level in nearly two decades on March 18 after Saudi Arabia signaled it would continue to produce at a record 12.3 million barrels per day “over the next few months” .

Meanwhile, naphtha prices are languishing to their lowest level in 17 years due to weak downstream demand which has driven down cash freight premiums.

In the Southeast Asian LLDPE market, buying indications for the week were $ 750-800 / tonne CFR SE Asia, market sources said.

A tipping point may be $ 800 / tonne CFR SE Asia for many, with producers telling customers they would welcome any offer above that level while buyers have indicated reluctance to enter into discussions with a supplier above. of this price.

Data from CIHI showed that a drop in the price of LLDPE below $ 800 / tonne CFR Southeast Asia would put prices at their lowest level since CIHI began tracking the data in August 2010.

“There is a mismatch between the expectations of producers and buyers,” a market source said.

In countries like Malaysia, efforts to control the coronavirus outbreak have had a direct impact on downstream demand as converters there have been urged to reduce production to minimum levels and only serve the domestic market as the country imposed a two-week movement control order starting March 18.

In addition, the recent gains of the US dollar against Asian currencies have also resulted in a sharp rise in the relative price of imports in US dollars and as a result, many buyers in Southeast Asia prefer to purchase LLDPE products on the local market.

“Local prices are always right,” the same market source said. “They may have gone down $ 10-20 / tonne, but overall it’s not as bad as the import price is going down.”

In Indonesia in particular – whose currency, the rupee, fell to its worst level against the US dollar since the late 1990s – buyers have stayed well away from imports and instead source from producers. locals like Chandra Asri Petrochemicals.

“For Indonesian buyers now, buying imports in US dollars will be very risky,” another market source said.

Focus article by Izham Ahmad

($ 1 = Rp 15,997)

Photo: Roads fog in the city of Lhokseumawe, Indonesia to prevent the spread of the novel coronavirus – March 19, 2020 (By Maskur Has / SOPA Images / Shutterstock)

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