Jun 29, 2022 9:09 p.m.

Morning Briefing - 24 May 2022

CommoPlast CommoPlast Asia Sdn Bhd
Another burning question Asian market participants are pondering is whether the ethylene costs are nearing the bottom after shedding more than $250/ton in a span of six weeks since the peak?
Title

Available in

CommoPlast

Morning Briefing

24 May 2022

 

Brent:  $113.42 (+ $0.87

WTI: $110.29 (+ $0.01

 

Naphtha CFR Japan: $908 (+ $5)

 

Ethylene CFR NEA: $1100 (Stable)

Ethylene CFR SEA: $1150 (Stable

 

Propylene FOB Korea: $1075 (Stable)

Propylene CFR China: $1050 (Stable)

 

*Data reflected the closing prices on the previous day

 

www.commoplast.com     

……………………………………………………………….

For several weeks now Chinese buyers insisted on buying ideas for import HDPE and LLDPE film at well below the $1200/ton threshold, citing the competitive local cargoes and cloudy demand outlook. Resisted at first, but an increasing number of overseas sellers are giving in, cutting prices steeply to smoothen the sales process.   

Deals for Middle Eastern LLDPE film have been reached at $70/ton below the initial price list last week, at $1150/ton CFR China. While proceeding with the purchases, Chinese customers also discussed the possibility of further decline ahead. 

A trader told CommoPlast, “The market confidence is rather low. Shanghai reopening might not bring the oomph everyone was hoping for.  The retail sector might take months to fully recover from the lockdown, while the rampaging inflation hurt consumption.” But buying at low prices facilitates the re-export activities if the opportunity arises, the source added. 

……………………………………………………………….

Another burning question Asian market participants are pondering is whether the ethylene costs are nearing the bottom after shedding more than $250/ton in a span of six weeks since the peak?  

Many believed that the market still has room for further reductions. 

For Asian ethylene producers, profit margins are eroding rapidly. The naphtha-ethylene spread in Northeast Asia is now at $192/ton and in Southeast Asia at $242/ton – much lower than the theoretical spread of $300-350/ton. These producers are weighing the possibility of further operating rate cuts to minimise the losses amid the rising energy and naphtha costs. If materialised, the market might have enough support to halt the current downtrend. 

At the moment, South Korean crackers are operating at 75-90% capacity, Chinese and Southeast Asian crackers at 70-90%, Taiwanese crackers at 80-90%, and Japanese crackers at 80-100%, according to industry sources.

______________________________________________________________

Follow us on CommoPlast Official Telegram Channel for more: https://t.me/commoplast

About CommoPlast Asia Sdn Bhd

Your empowering market insight site.