Morning Briefing - 25 July 2024
CommoPlast
Morning Briefing
25 July 2024
Brent: $81.71 (+ $0.70)
WTI: $77.59 (+ $0.63)
Naphtha CFR Japan: - $10
Ethylene CFR NEA: Stable
Ethylene CFR SEA: Stable
Propylene FOB Korea: Stable
Propylene CFR China: Stable
*Data represent closing prices of the previous trading day
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For the first time in eight months, Saudi HDPE film prices have dropped below the $1000/ton threshold in Vietnam, driven by persistent weak demand and ample supply conditions.
International producers may be compelled to reduce operating rates or even shut down if the downtrend continues to avoid severe margin erosion. The upstream ethylene market, with current costs at $925/ton CFR Southeast Asia, suggests that HDPE film should theoretically be priced at $1075/ton when factoring in $150/ton conversion costs. However, the prevailing market prices are well below this baseline, signaling critically poor operating profits.
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Despite a major Taiwanese producer raising August PVC shipment offers to Southeast Asia by $40/ton, most regional suppliers have not followed suit. In Malaysia, buyers reported new offers from regular sellers with only a $10/ton increase, yet, negotiations are intense.
Concurrently, the local Chinese PVC market has visibly weakened due to a lack of governmental support policies. Several Chinese traders are now looking to redirect more cargo to the export market in an effort to deplete on-hand stocks, reflecting growing concerns over domestic demand.
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