Market sources in the region reported to SSESSMENTS.COM that for the week commencing April 6 the leading Saudi polyolefins producer approaches China and Southeast Asia market with contrasting pricing strategy. The producer is offering LLDPE Film C4 cargoes to China with a steep increase of $60/ton while to Vietnam, the price changes on weekly comparison captured in both directions. Some received with a reduction of $30/ton while some with an increase of $10/ton. According to market players, the producer’s decision to raise LLDPE Film C4 offers to China is supported by the upward momentum in the futures market as September 2020 LLDPE futures price on Dalian Commodity Exchange surged CNY310/ton ($44/ton) since the beginning of April.
Despite the varying strategy, SSESSMENTS.COM noted that the producer managed to conclude some deals in China and Vietnam at the initial offer level. However, in Vietnam the majority of market players are not keen to make procurement due to sluggish demand, the uptrend in the China market is believed to be temporary, sufficient inventory, the current levels are deemed too high, factories remain shut stemming from the lockdown imposed by government to curb the spread of Coronavirus as well as they are keeping a close eye on the outcome of OPEC+ meeting on Thursday, whether there will be an agreement to cut between 10-15 million barrels per day (bpd).
Further added by a converter in Vietnam, even though the producer lowered offers for LLDPE Film C4, the company is not interested as a Singaporean producer is offering the same materials with flexible payment terms. ‘’We think it is better to buy from Singaporean producer as they are willing to accept TT payment while the leading Saudi polyolefins producer is firm on LC at sight, unwilling to accept TT payment regardless of the circumstances. Therefore, we decided to purchase Singaporean LLDPE Film C4 at $770/ton on TT payment term, CIF basis,’’ the converter explained to SSESSMENTS.COM. In 2018, Saudi Arabia was the top PE supplier to Vietnam. The country imported 755,489 tons of PE cargoes from Saudi Arabia while for Singapore origin at 73,209 tons. Saudi Arabia remained as the top PE supplier to Vietnam in 2019 and 2018, with import figures stable year over year. However, there was a shift in the top 3 suppliers when compared 2019 to 2018. In 2019, after Saudi Arabia, the United States was the second key PE supplier to Vietnam followed by Thailand. In 2018, the top 3 suppliers were Saudi Arabia, Thailand and South Korea.
