US down $66/mt on falling global prices, softening demand; Asian buyers await market direction
Instead, LDPE pricing seemed influenced by falling global prices and softening demand.
Buyers were hesitant to commit to purchases amid falling prices, some sources said.
With buyers on the sidelines, traders were weighing their export options.
Falling prices in Asia and Latin America presented challenges for US traders, sources said.Those markets were experiencing bearish demand, sources said.
Bagged product for export was talked in a range of 56-58.50 cents/lb (\\$1,235-\\$1,290/mt), with one trader saying rail car could be bought at 56 cents/lb.
Platts export pricing accounts for an additional 2.5 cents/lb for bagging and transportation to the port.
Some trading sources sought to buy at lower levels.
"I need to pricing in the mid- to low- 50s cents/lb to make exports work," a source said.
The weakening in pricing came despite the LDPE market continuing to be heard with limited availability by market players this week.
In domestic production, LDPE production fell in June 4.3% than the year-ago month and 3.1% year-to-date, data showed this week.
However, at least one buyer said that the market might not be as tight as buyers believe, pointing to the number of offers he was receiving from producers.
In contracts, pricing in the domestic market was heard unsettled for July, with participants indicating that a rollover was likely.
A flat July CP could pressure prices lower in August despite some producers' attempts to implement increases of up to 5 cents/lb in the coming month, sources said.
June domestic LDPE contracts were assessed at 71-72 cents/lb (\\$1,565-\\$1,587/mt) for delivered rail cars after rolling over from May.
LATIN AMERICA
Low-density polyethylene import assessments dropped in key Latin American markets, as lower pricing levels were heard.
In Brazil, the assessment fell \\$20/mt at \\$1,375-\\$1,355/mt CFR Brazil as market participants pegged US trading levels lower, amid thin trading interest.
"Prices must be lower than \\$1,400/mt to get a minimal attention," a Brazil-based trader said. "In fact, even if the price is attractive, the dollar is very strong, which holds us back from importing."
Exchange rate on July 29 was 3.3266 reals/US dollar.
In the export market, prices from Brazil were heard stable for the week at \\$1,525-\\$1,535/mt FOT basis.
Brazilian offers to Paraguay and Uruguay were heard unchanged for the week.
However, there was market sentiment there that a decrease from Braskem might happen in the coming weeks, as agressive offers from the US were heard as much as \\$290/mt lower than Brazilian ones, sources in Paraguay said.
The import assessment in Peru dropped \\$40/mt week on week to \\$1,375-\\$1,385/mt CFR basis July 29 amid bearish trading interest as many participants were off celebrating Peruvian Independence Day.
US and Brazil-based traders that sell material into the region talked prices below \\$1,400/mt CFR basis.
"Demand is completely stopped. Even with prices dropping, buyers are on the sidelines concerned about the dollar appreciation against their own currency," a US-based trader said.
ASIA/MIDDLE EAST
Low density polyethylene prices fell this week amid weak demand as buyers remained on the sidelines waiting for clearer market direction to emerge.
A number of smaller distributors in China had positions in both equity and commodity markets and were losing money amid the fall in China's equity markets, traders in China said.
Crude futures were on a downtrend, with September ICE Brent futures down \\$3.75/barrel week on week at \\$52.69/b at 4:30 pm Singapore time (0830 GMT) July 29.
In plant news, Iran's Amir Kabir Petrochemical Co. plans to shut its polyethylene complex for 20 day's maintenance in April 2016, a company source said.
The complex has a 140,000 mt/year HDPE plant, 240,000 mt/year LLDPE plant and 300,000 mt/year LDPE plant.
LDPE was assessed down \\$55/mt week on week at \\$1,275/mt CFR Far East Asia July 29.
The CFR Southeast Asia marker was assessed down \\$15/mt over the same period at \\$1,295/mt.
Lower offers heard at \\$1,250/mt CFR Far East Asia could not be confirmed and were excluded from the assessment.
Traders did not give firm bid and offer indications, but said the high \\$1,200s/mt for both CFR Far East and Southeast Asia were workable trade levels.
EUROPE
The main talking point in the European low density polyethylene market was the settlement of the August ethylene contract price at a decrease of Eur70/mt to Eur1,035/mt FD NWE.
The ethylene contract price has increased every month since February.
This decrease marks a turning point for the market.
European LDPE spot and contract prices were down on the week, as the bearish ethylene level weighed on prices.
The bearishness in ethylene was attributed to easing supply constraints and a soft naphtha.
Naphtha prices have averaged \\$476/mt CIF NWE so far this month, compared with June's average of \\$538/mt.
Shell's Moerdijk steam cracker in the Netherlands came back into operation in mid-July easing tightness in the European market.
In the spot market, prices were assessed at Eur1,480/mt FD NWE, down Eur20/mt week on week.
Traders and distributors said that in the spot market, buying was on sidelines as converters were expecting lower prices in August.
Despite that, shortages remained in some specialty grades, sources said.
"LDPE coating grades are balanced to tight, weather has led to buoyant demand," a producer said, adding that the stock build remains absent as a result.
An unplanned outage started at Sabic's Geleen LDPE plant in the Netherlands last week, while Versalis' LDPE plant will undergo planned maintenance at the end of September.
Serbia's HIPS plant will also begin planned maintenance by the end of this week.
In the contract market, converters were eying decreases in July, with LDPE contract price bids heard at Eur1,700-1,710/mt FD NWE, while producers were offering a rollover.
Platts assessed prices down Eur20/mt on the week to Eur1,730/mt FD NWE.
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