Unexpected Demand Dullness Resists Any Improvement in HDPE Prices in Asia
Unexpected Demand Dullness Resists Any Improvement in HDPE Prices in Asia

Unexpected Demand Dullness Resists Any Improvement in HDPE Prices in Asia

  • 09-Mar-2023 4:58 PM
  • Journalist: Robert Hume

High-density polyethylene (HDPE) prices were observed to remain unchanged in the Asia at the start of March 2023, despite of rising upstream crude oil value and limited production in the face of slow global demand. The sudden escalation in crude oil costs have eroded margins globally, impacted production, and resulted in HDPE production cuts by several Asian producers in the second half of February 2023.

The uncertain HDPE demand and weak demand outlook opportune key market payers to opt for the maintenance plant shutdowns. In the Chinese market, Lianyungang Petrochemical with a total capacity of 400,000 mt/year at Xuwei (China) introduced maintenance turnaround at the end of February 2023. Meanwhile, Sinopec-SK Wuhan Petrochemical took a maintenance plant shutdown in mid-February 2023 with a total capacity of 300,000 mt/year, and plant turnaround extended towards the end of Q1 2023. Market participants were cautious about the outlook of polymers this year in a high-cost environment in comparison with 2022. According to the traders, short-term demand primarily lies in China due to its large consumption levels and quoted stability in the weekly prices of HDPE in the week ending 3rd March 2023, and rationalization of capacity is expected in China while stagnancy in the commodity demand continues.

Contrary to the trend in the other adjacent market, HDPE prices were down in South Asia this week, as there was not sufficient demand from China, as anticipated after the end of the Lunar holidays in the country, also deteriorating the market outlook. Furthermore, Asian HDPE prices were already hovering at high levels in the previous weeks, and a weak scope of increase in the HDPE prices is anticipated amid slower domestic as well as international inquiries in the market. Moreover, the inventory situation has also been improved with the revival of production activities in the Indian market and moderate demand affecting pricing dynamics in March.

As per ChemAnalyst, HDPE prices are anticipated to show downward momentum in March 2023, backed by the expected slower downstream demand and consistently high inventory levels in Asia. However, HDPE production cost may rise due to the expected elevation in upstream crude oil value in March 2023.

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