Mar 29, 2024 6:16 p.m.

Morning Briefing - 9 May 2022

CommoPlast CommoPlast Asia Sdn Bhd
Morning Briefing - 9 May 2022
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CommoPlast

Morning Briefing

22 May 2022

 

Brent:  $109.77 (+ $1.51

WTI: $112.39 (+ $1.49

 

Naphtha CFR Japan: $910 (+ $13)

 

Ethylene CFR NEA: $1190 (- $20)

Ethylene CFR SEA: $1240 (- $20

 

Propylene FOB Korea: $1150 (Stable)

Propylene CFR China: $1135 (Stable)  

 

www.commoplast.com     

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The import PE market in China extended the weakening trend, hitting multi-month lows in the week to 6 May 2022 despite the firmer domestic ground. Buy ideas for dutiable HDPE and LLDPE film remained below the $1200/ton threshold, which obviously lower than the upstream ethylene costs at the moment. 

As reported earlier, overseas sellers prefer to divert cargoes to other destinations for better profit margins while only allocating the minimum quantity to China to regular customers. The recent downtrend in Southeast Asia might have left international sellers with a smaller pool of markets with good margins to exploit. 

Hopes are that demand in China would rebound once the government eases COVID-19 containment measures while pumping economic stimulus to boost domestic growth. The question is: would prices be able to rebound when the government keeps tight control over the inflation rates.  

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Given the negative margins at the downstream markets, the Asian ethylene costs raced lower, yet demand remained thin. Data from CommoPlast showed margins for HDPE film were at minus $130/ton at the current ethylene prices. 

Meanwhile, Asian crackers are likely to maintain the current operating rates at 80-90% capacity considering the sluggish demand condition and the rising naphtha prices following the hikes in the energy complex.   

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