Morning Briefing - 20 November 2024
CommoPlast
Morning Briefing
20 November 2024
Brent: $73.31 (+ $0.01)
WTI: $69.39 (+ $0.23)
Naphtha CFR Japan: + $15
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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Trading sentiment in the Indian PE market remained flat in the post-Diwali period, with sufficient supply across grades. According to sources, a leading domestic producer introduced an incentive scheme to encourage restocking activities, offering discounts ranging from INR 750 – 2,000/ton on LLDPE film and INR 2,000 – 3,000/ton on HDPE film, based on purchase volumes.
The initiative is anticipated to exert downward pressure on the import market, coinciding with the expected announcement of December shipment offers from international suppliers later this week. Market participants indicated that tradable prices for HDPE and LLDPE film on CIF India terms are currently in the mid-$900/ton range. These price levels may prompt overseas sellers to redirect allocations to neighboring markets, where higher margins could be achieved.
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The Asian naphtha market has been on a continuous decline since early October 2024, shedding a total of $73.5/ton in value and bringing spot offers to their lowest level this year. Participants in the sector report having faced challenges from reduced demand from naphtha crackers across Asia, where production margins have thinned into losses. Volatile energy prices have further contributed to the softness in the naphtha market.
Market participants are closely monitoring the critical $600/ton threshold, with many anticipating that naphtha prices could dip below this level. This expectation is driven by a bleak near-term demand outlook, exacerbated by extended shutdowns across Southeast Asia. A further decline in naphtha costs would provide much-needed relief to Asian naphtha crackers, helping to mitigate margin erosion.
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