Southeast Asian LDPE prices rise with tighter supplies

Southeast Asia's low-density polyethylene (LDPE) film prices have risen to new highs on the back of tighter supplies from global producers. Prices were $1,280-1,350/t cfr southeast Asia for dutiable supplies on 26 November, the highest since April 2017 and a 48pc increase since the start of this year.

LDPE film prices in southeast Asia increased by 13pc or $155/t from the previous week, nearly double the week-on-week increase of $80/t in September this year. LDPE film prices typically recorded weekly gains of $10-30/t in southeast Asia with more balanced supplies and demand.

Prices of non-dutiable LDPE supplies were higher at $1,370-1,400/t cfr southeast Asia and $1,400-1,450/t cfr Vietnam respectively, according to Argus data.

Vietnam's spot supplies traded as high as $1,700/t cfr Vietnam for limited quantities late last week. The uncertain arrival of overseas-origin LDPE imports and rising freight rates because of container shortages across Asia possibly prompted converters to seek regional prompt LDPE film supplies at unusually high prices to fulfill downstream orders of plastic goods. Intermittent production interruptions at Thai producer PTTGC's 300,000 t/yr LDPE plant and Malaysian state-owned Petronas's 255,000 t/yr LDPE plant in November have also tightened regional spot supplies.

LDPE supplies have largely tightened since August this year when firm demand for ethylene-vinyl acetate (EVA) encouraged LDPE/EVA swing plant owners to increase output of EVA and produce less LDPE film.

A near year's delay in the start-ups of Taiwanese producer Formosa Plastic's 400,000 t/yr LDPE plant and Sasol's 420,000 t/yr LDPE plant in the US to this year's fourth quarter meant there was no ease in global supplies in 2020.

Polyethylene production disruptions in the US because of hurricanes, delayed shipment of Iran-origin LDPE supplies to Asia and production swings to EVA by some LDPE/EVA plant owners have created a series of supply shocks in the Asian market.

China LDPE prices have increased by 93pc to $1,400/t cfr in late November from a record low of $725/t cfr in early April when China's economy was in in its early phases of recovery from the Covid-19 pandemic.

Increased demand emerged for photovoltaic (PV) grade EVA, which is used to laminate solar panels. EVA demand for solar panel lamination is expected to remain high in the short term with Chinese solar firms taking proactive measures in this year's fourth quarter to lock in the supply of polysilicon in the coming years, the primary feedstock to produce solar cells.

It remains to be seen if the imminent revision to China's subsidy on solar projects in 2021 will slow down demand for PV cells and its raw materials. China's government has halved its subsidy for solar projects this year to 1.5bn yuan ($228mn) compared with 2019, in an effort to phase out financial support from the renewable energy industry.

But China remains the world's largest producer of solar panels and components, accounting for 69pc of global polysilicon capacity, 93.7pc of silicon wafer capacity, 77.7pc of solar cell capacity and 69.2pc of solar module capacity, according to China's national energy administration.

By Yee Ying Ang