Sources: Vietnam PE Market Still Hit After Pandemic Crisis Passes
- Most downstream factories are struggling to keep their production rate at normal levels
- Demand has yet to pick up despite bullish market sentiment
- Outlook remains pessimistic
Market sources voiced out to SSESSMENTS.COM that the Vietnam PE market is likely to continue to be hit, even after the peak of the coronavirus pandemic passes. Vietnam’s domestic PE prices have gained strength this week, buoyed by a rebound in crude oil prices and a further easing of coronavirus lockdown measures, which is lifting market sentiment. Over the week, localized PE prices have increased around VND1,000,000/ton ($43/ton) on a week-on-week comparison. However, after securing sufficient volume in the past couple of weeks, some converters are holding back their purchases this week as most still have sufficient stocks for the near term production.
Vietnam saw PE prices trending higher in the import market, driven by a jump in crude oil prices and higher ethylene prices. For Southeast Asia origin cargoes, the leading Malaysian polyolefins producer has announced June shipment offers to the market this week. On a month-on-month comparison, the producer initiated a price increase of between $20/ton on HDPE Film grades and $50/ton on LDPE Film grades. For Middle East origin, the leading Saudi producer has also adjusted its May shipment offers further this week. As compared to the previous week, the producer applied a price increase of $10/ton for HDPE Film and LLDPE Film C4 cargoes, while maintaining a stable offer level for LDPE Film grades. Market talks have it that the producer has sold out all allocation for May shipment. For North America origin cargoes, most US producers prefer to divert their allocation to the China market since Vietnamese buyers are unwilling to accept higher prices. At the moment, the majority of buyers are reluctant to purchase Indian origin cargoes as India is still battling a war against the highly contagious disease, which led to a total lockdown in the country.
To date, Vietnam has put the pandemic under control with below 300 infections and no fatalities. The slowdown in the number of new confirmed cases has allowed the government to start relaxing its near-total coronavirus lockdown restrictions from late April. Under strict physical distancing protocols, authorities in Vietnam started allowing most businesses in low-risk areas to resume operations from April 25. As the country has gradually begun lifting restrictions and resuming operations, market sentiment has shown a sense of relief within the last couple of weeks. However, recovery in domestic demand has yet to take hold as most buyers are reluctant to purchase large volumes of materials since the outbreak has devastated global chemical markets and sent shockwaves across the economy. On the production front, a large number of downstream factories are still running at a reduced capacity as overall demand for end-products is in a downbeat period. SSESSMENTS.COM supply and demand database showed that the availability of PE materials in Vietnam remains sufficient so far.
Market sources in Vietnam foresee that the uptrend in PE prices might be short-lived as the current higher prices are driven by rising ethylene and crude oil prices only, yet no support from strong demand.
Click below to view related stories and content on the Vietnam PE market:
WeeklySSESSMENTS: Vietnam PE Prices Week Starting May 4
NewsSSESSMENTS: June Shipment PE Offers To Philippines, Vietnam Moved In Tandem
NewsSSESSMENTS: Ethylene Prices Moving Into A New Trend, Broken Fresh Threshold Level
