News Code : 43458

Petrotahlil :Chinese players will be away from the market for the week-long National Day holiday starting this weekend. Ahead of this break, the import PE market rebounded from its 10-year low as Middle Eastern suppliers lifted their offers in the aftermath of attacks on Aramco.

Prices rebounded from a decade low 

Two weeks ago, PE prices on CIF China basis witnessed their first gains following two months of consecutive declines and slightly rebounded from a decade-low on the back of lower inventories and higher crude oil futures.

As an initial reaction, most players questioned the sustainability of those price gains in the face of the trade dispute with the US, lingering concerns over supply and weaker global economy outlook. However, the market was able to extend its gains to the following week.

Supply cuts from Saudi Arabia supported the price rebound 

On September 14, Saudi Aramco’s facilities in the eastern part of Saudi Arabia were targeted by multiple disruptive drone attacks, forcing several Saudi producers to reduce operating rates at their plants.

As a result of this incident, Saudi PE suppliers either withheld or increased their offers to China last week.

Pre-holiday purchases and approaching high season 

Not only unexpected supply disruptions from Saudi Arabia, namely China’s top HDPE and LLDPE supplier, but also improved purchasing activities ahead of the National Day holiday and the approaching high season also contributed to rising price levels.

Several traders based in China noted that buyers were eager to make purchases before the holiday week starts to make sure that they are covered ahead of the high season.

Sizeable Oct hikes from Saudi major

On top of these, a major Saudi Arabian producer has approached the market this week with hefty increases of $40-60/ton in its October PE offers.

An agent of the producer commented, “Import PE prices have surged due to supply disruptions from the Middle East in the aftermath of attacks on Saudi oil fields. Demand has improved, particularly for HDPE film, and it is better than the last quarter. We hope that trading activity will increase in the fourth quarter ahead of the year-end holidays.”

What casts a shadow over the strong outlook? 

Considering the factors above, China’s PE market might be able to maintain its current trend in the post-holiday period, several players opined.

On the other side of the coin, some do not exclude the possibility of seeing a shift in the price trend, pointing to the fact that domestic PE production in China will continue during the holiday which traditionally causes a supply glut when players return to their desks from the week-long break.

Besides, earlier fears of a feedstock shortage have mostly subsided as Saudi Arabia has restored oil production after the attack on its facilities.

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