US polyethylene (PE) export prices declined again this week, as weak global demand combined with lower prices out of Asia continued to add downward pressure.
US prices were assessed down by between 1.5¢/lb to 5¢/lb from last week's levels for the week ended 15 May, depending upon the grade. The range is beginning to narrow as the upper end has dropped due to a lack of buying interest, sources said.
Prices have been easing over the last three weeks due to competion from Chinese resin, which was in some cases as much as $400/t cheaper than US PE. Now, as Chinese prices are rising, and as freight costs out of China increase, the spread between the two regions has narrowed, traders said.
"The China window is starting to close because China prices have gone up… and freight is going up also from China," said one US PE trader.
But buyers are not willing to entertain higher prices, as they are finding they are having trouble passing those increases on to downstream customers, the trader said.
"Demand is very, very weak," the trader said.
Global buyers for now are waiting on the sidelines, hoping for further price declines. Traders said they are only doing back-to-back deals at the moment.
"Our position is not to buy anything for inventory right now," said another US trader.
Preliminary April data from the American Chemistry Council (ACC) released this week showed total US/Canada PE exports declined by 8.5pc from March levels. Exports represented 43.8pc of total sales in April, down from 45.3pc of total sales in March, according to the ACC's Plastics Industry Producers Statistics Group as compiled by Vault Consulting.
Market participants said they expect lower export volumes to continue in May, unless prices decline further.
One trader said global buyers likely have enough inventory to hold them through at least mid-June or even into July. The trader said prices would need to fall down to the 40s¢/lb level before demand would significantly improve.
