In Asia, spot ethylene prices have been rising steadily since the start of the new year even as spot PE prices have held largely stagnant in the face of lackluster demand. Many PE producers are now complaining that they cannot cover their theoretical production costs based on spot ethylene prices now that spot ethylene is trading at prices close to the prevailing offer levels for HDPE film in China’s import market. Makers of both HDPE film and LLDPE film are operating well below their theoretical breakeven levels based on spot ethylene prices.
Spot ethylene prices on a CFR NEA basis have risen by $125/ton when compared with the first week of January while offers for HDPE film on a CFR China basis have posted smaller increases of $10-25/ton and LLDPE film prices on a CFR China basis have increased by $10/ton on the low end of the range. In spite of the increasingly thin spread between ethylene feedstock costs and PE prices, ethylene sellers reported that they are standing firm on their higher offer levels considering the prospect of higher crude oil prices as political unrest spreads through the oil-producing countries of the Middle East and Asia prepares to enter a heavy cracker maintenance season.
In spite of steadily increasing ethylene feedstock costs, major overseas producers are mostly announcing their March PE prices with rollovers to even decreases when compared with their most recent February offer levels, while those producers that have raised their March prices in hopes of covering their increasing production costs report that their new prices have met with resistance from the buyers’ side.
This week, a South Korean producer announced their March LLDPE film prices with decreases of $50/ton when compared with their most recent sell ideas while a Taiwanese producer reduced their March sell ideas for LLDPE film by $20/ton from their most recent price targets. Late last week, a global producer announced rollovers on their offers for both HDPE film and LLDPE film while a Middle Eastern producer who raised their prices by $60-70/ton for LLDPE film and by $50-60/ton for HDPE film complained that buyers have been unwilling to accept their new prices.
