SEA PE Rally Faces Demand Ceiling Despite Robust Cost Support, Reduced Supply

Southeast Asia’s PE import market has continued to strengthen since mid-July, with prices reaching around two-month highs. Higher upstream costs and tighter availability have supported the rally, although weak downstream demand and strong buyer resistance have limited the extent of price increases.

Rising Costs Support Seller Confidence

Upstream markets have remained firm, giving PE suppliers stronger grounds to maintain higher offers. Higher freight costs and tighter vessel and container availability have added to sellers’ expenses.

Brent crude averaged around $92/bbl in the week ending August 21. Spot ethylene prices in China and Southeast Asia have also reached their highest levels in about three months.

Since early July, Brent has increased around 23%, while spot ethylene prices have risen approximately 26-27%. By comparison, Southeast Asian import PE prices increased around 13% for LDPE and about 15% for LLDPE and HDPE. This gap leaves suppliers with room to seek further increases if upstream costs remain elevated.

Tight Supply Limits Buyer Options

Supply constraints have further strengthened sellers’ positions. Middle Eastern shipments have faced unstable schedules, while US cargoes have reportedly been delayed by logistics issues, including Panama Canal-related disruptions. Reduced operating rates at some regional plants have also limited local availability.

As a result, buyers have had fewer sourcing options, with Chinese material accounting for a larger share of available offers. However, Chinese cargoes have also been offered at elevated levels, sometimes close to regional-origin prices.

Weak Demand Caps Further Gains

Despite strong cost support and tighter supply, demand remains the biggest obstacle to a stronger rally. Buyers continue to purchase mainly for immediate requirements and remain resistant to high-priced cargoes.

Converters are also struggling to pass higher resin costs through to finished products. Some are seeking cheaper alternatives or reducing operating rates, while weak downstream orders continue to limit replenishment.

Overall, Southeast Asian PE prices are likely to remain firm as long as energy costs and supply constraints persist, but the extent of further gains will depend heavily on whether downstream demand improves.

Stay ahead of market trends with the Credco app. For any queries, please reach out via WhatsApp at +91 8448083211.