As SSESSMENTS.COM noted, Southeast Asian buyers’ acceptance level for import Middle Eastern PE offers shift significantly following the negative US crude oil prices. A marketing arm of a Middle Eastern PE producer informed SSESSMENTS.COM that this week, the company’s offers are a rollover from last week, but prices are considered unworkable since no buyers are willing to take the high prices at the moment. As such, the company is asking customers’ buying ideas and asking them to submit bids.
For LLDPE Film C4, most customers in Malaysia, Indonesia and Singapore, submitted bids between $80-100/ton lower than the initial offer levels. While for HDPE Film and LDPE Film cargoes, most customers in Indonesia and Malaysia placed bids at $60-80/ton and $80/ton respectively, lower from the initial offer levels. Moreover, after the news of negative US crude oil prices came out, a lot of customers calling and asking for price compensations as they bought cargoes at higher prices previously. “Taking into account the current ethylene prices, some customers also expect PE prices to drop further to $500/ton-threshold level,” the source added to SSESSMENTS.COM.
Specifically in Malaysia, most of the factories are still running at 50%, as they do not want to take the risk running at a higher rate. Some of the big players are granted permission to run at full capacity, but they are lacking manpower, as some of the workers are coming from the red zone and they are not allowed to go to work. Considering that, even the end-users factories are also running at 50% as they are avoiding the same issue. Overall, SSESSMENTS.COM noted that businesses in Malaysia remain slow, warehouses are full since the demand for both raw materials and finished products is shrinking.
Speaking further about the negative US crude oil prices, the source said to SSESSMENTS.COM that China would be one of the countries benefiting from this situation, as they can buy and absorb some volume at the moment. Following that, there is India and some refineries in Indonesia are heard also buying crude oil. For Brent crude oil prices, the source is not sure whether the price will also drop trailing the US West Texas Intermediate (WTI).
The source opined to SSESSMENTS.COM that the outlook for PE market remains bleak. Few months ahead will remain very tough for market players. Even the banks would have a big issue because of unpaid debts as customers are unable to pay their loans. The government is also struggling since they are spending a lot of funds in a battle to fight the Coronavirus pandemic.
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