ICIS Reports (9 May 2020)

ICIS Reports (9 May 2020)

09/05/2020 Share
ICIS Reports (9 May 2020)

Asia & China market

Polyethylene

China’s polyethylene (PE) import prices were mostly up in the week, supported by higher futures values which took hold early in the week although deals had fizzled out by late week. Southeast Asia’s PE import prices were largely stable to firm with gains seen in some segments of the market, supported by China’s market. The easing of virus control restrictions in some countries in the region, including Malaysia and Vietnam, injected some optimism in the market and drove a more positive sentiment. Despite that, there were few signs of any concrete recovery yet in downstream demand and that was also keeping market players wary about how sustainable the gains

Outlook:

• Market cautious about whether recovery can sustain

• China recovery likely to support SE Asia market

• China arbitrage window for imports likely to stay open

 

Polypropylene

Sentiment in China’s polypropylene (PP) import market was mixed, with homopolymer prices finding support early in the week from bullish futures. In the second half of the week, suppliers cut offers slightly to entice buying interest, amid slow cargo off-take as futures values reversed previous gains. Rising crude prices rendered support to the domestic PP futures and spot prices after the Labour Day holiday. Prices in southeast Asia rebounded, though market players remained uncertain if the current uptrend can be sustained in the coming weeks. Sentiment was bolstered by firmer Chinese prices and gains in upstream markets. Suppliers were mostly not facing inventory pressure, having offloaded significant volumes to China previously.

• China PP futures reverse early-week gains

• Bullish crude supports market post-Labour Day

• Offers to SE Asia firm as inventory pressures ease

Outlook:

• Sustained crude rally could support sentiment

• Demand could recover as restriction measures ease

• Suppliers not under immediate inventory pressure

Middle East/South Asia

 

 Polyethylene

• Mideast prices mostly fall on weak demand

• Indian demand stays largely weak

• Recovery in broader Asian demand props Pakistan's deals

 

Polyethylene (PE) prices across the Middle East mostly fell amid weak demand that prevailed, apart from the downstream food packaging sector that supported some resin uptake in the GCC.

Despite lifting of lockdowns in the East Mediterranean (East Med), high finished goods inventories affected demand. Heightened border checks delayed arrivals. Poor sales for most consumer products resulted in cash flow issues. Indian demand stayed weak, amid an extended lockdown across major cities, the key demand centres. Processing units producing essential goods were unable to ramp up operations, owing to labour shortages and cash flow issues. Pakistan saw buying momentum pick up, spurred by uptake from the food packaging sector. A recovery in Chinese demand and prices further propped May deals.

 

Outlook:

• GCC, East Med demand may improve post Ramadan, Eid

• India may see demand improve as restrictions are gradually lifted

• Domestic surplus may temper Indian imports' demand

 

Europe

 

Polyethylene

• PE demand weaker than expected for May

• Some grades still very strong

• Crude and naphtha stronger

• Spot ethylene very weak

 

Polyethylene (PE) demand is mixed, and very grade specific.

Low prices deter fresh imports in some grades.

Flexible packaging is generally strong while rigid packaging and durable goods are weak.

Many sources see May as the potential bottom of the current cycle, as crude and naphtha rise, but global oversupply amid poor economies also weighs on sentiment, leading to a very uncertain situation and outlook.

News of PE cutbacks has galvanised some buyers into action.

 

Outlook:

• Crude and naphtha could support June ethylene

• Easing lockdowns could support demand

Uncertainty to continue

 

Turkey

 

Polyethylene

 

• Prices diverge

• US suppliers increase offers

• Business winds down for year-end

 

Turkey polyethylene (PE) prices are stable to soft this week, as high ends have fallen for most products.

There is no change in fundamentals but sentiment did improve slightly as the Turkish government announced it would allow opening of shopping malls and easing of entry and exit restrictions in major cities. This is part of a larger easing of restrictions put in place to limit the spread of corona virus.

The Turkey/Iran border has been re-opened but only 60 trucks a day are allowed to cross into Turkey. Food deliveries have been prioritized for now. this has brought a selection of offers from Iran.

Outlook:

• Demand not expected to greatly improve until after Ramadan

• Supply to retain length, following glut of offers and some cancelled orders