LDPE Prices Take a Major Dip in Asia - What Does That Mean?

Producers this week as LDPE prices have dropped across the Asian region. Industry sources in Asia remain unnamed yet cite weakening demand and a decrease in Ethylene feedstock values as significant factors weighing negatively on pricing. These weakened demand fundamentals are putting pressure on global margins, which is likely to affect the launch of new PE plant capacities in parts of Asia. Market sentiments remain dampened with new production set to outpace long-term demand and compress margins further.

Prices of LDPE film grade in Far East Asia were assessed at USD 1050-1080/mt CFR levels, a decline of USD 20/mt from the past week. Despite foreign producers quoting new offers as crude futures went down, Chinese buyers were seen refusing to accept these import offers. Middle Eastern manufacturers have offered their LDPE film grades within the range of USD 1050-1080/mt CFR levels for April 2023 shipment to China.

Prices for LDPE film grade in Southeast Asia have declined week-on-week by USD 10/mt, resulting in levels of USD 1080-1140/mt CFR. Trade activity has been sluggish, as the abundant supply of fresh material from new regional producers is being offered at highly competitive prices, eroding the restricted availability of product from Middle Eastern producers. In Vietnam specifically, Middle Eastern suppliers are proposing April 2023 shipments at around the same price range. With the arrival of festival season, demand for LDPE in Southeast Asia is expected to soften further.

Prices for Low-Density Polyethylene (LDPE) in India dropped by a per-metric tonne rate of USD 10 from the preceding week, reaching USD 1130–1170/mt CFR. Reliance Industries Limited amended their PE prices on March 16, 2023, with 4MI and 2MI grades decreasing by Rs 4/kg and all other LDPE grades declining by Rs 3/kg. The LDPE IM grade price remained unchanged. To secure these prices until April 1st, 2023, price protection was applied starting on March 16th.

The biggest concern in India’s open markets is whether certificates issued by the Bureau of Indian Standards (BIS) will be implemented. It is expected that the Quality Control rules that dictate Polyethylene product quality and reliability will become effective in April 2023, though there is speculation that this deadline may be extended for another six months.

Middle Eastern producers have offered their LDPE film grades in the range of USD 1130-1170/mt CFR levels for shipment to India in April 2023. Meanwhile, over in Pakistan, prices for the material were seen assessed at USD 1230-1270/mt CFR levels this past week, a fall of USD (-10/mt) compared to the week prior. With the start of Ramadan just around the corner, buyers seemed unenthusiastic about investing in imports due to local demand conditions remaining steady. Additionally, acquiring imports has become increasingly difficult for buyers as access to letters of credit (LCs) with confirmation is proving to be a challenge.

Over the past week, overseas suppliers have offered their LDPE film grades in several different countries at various levels. In Pakistan, prices were in the range of USD 1230-1270/mt CFR for April 2023 shipment. In Sri Lanka, the LDPE price declined by USD (-10/mt) to an assessment of USD 1240-1280/mt CFR for April 2023 shipment. In Bangladesh, LDPE prices decreased by USD (-10/mt) to stand at USD 1200-1250/mt CFR. A Saudi Arabian producer has offered its LDPE film grade at the USD 1200/mt CFR levels for shipment in March 2023 and a Middle Eastern producer has offered its LDPE film grade at the USD 1250/mt CFR levels for shipment in April 2023.

Feedstock Ethylene prices on Tuesday were assessed at USD 965-975/mt CFR Southeast Asia and USD 945-955/mt CFR Northeast Asia, both falling ten dollars from the week before.

PTT Global Chemical (PTTGC) is planning to carry out a maintenance turnaround at its 300,000 mt/year Low Density Polyethylene (LDPE) plant in Map Ta Phut, Thailand by the end of March 2023 and expects it to be offline for around twenty days.

Sinopec Shanghai Petrochemical has also taken their 120,000 mt/year No.3 Low Density Polyethylene (LDPE) unit offline in mid-March 2023 for maintenance, though no details have yet been given on how long it will remain shut down.