Southeast Asian PE Import Prices Reach 2.5-Month Highs on Steady Gains

Southeast Asia’s imported PE market continued its upward movement into September, extending the run of stable-to-higher prices for an eighth consecutive week. Weekly average prices for the three major film grades reached their highest levels in about two and a half months in the week ending September 4, although the increases remained relatively moderate.

Market conditions at the beginning of September were broadly unchanged. Strong upstream costs and higher freight expenses continued to support sellers, offsetting weak downstream demand and keeping prices firm. While a significant improvement in consumption remained absent, most market participants expected PE prices to remain stable to higher in the near term.

Upstream costs remain the main source of support

The PE market continued to receive strong support from the upstream chain. Renewed concerns over an escalation in US-Iran tensions pushed crude oil futures higher and contributed to a sharp rise in ethylene costs.

Brent crude futures increased by around 6% week on week during the first week of September, with the weekly average reaching approximately $95/bbl, the highest level in three months. Spot ethylene prices on a CFR China and CFR Southeast Asia basis also climbed by $70-80/ton, reaching their highest levels since the second half of May.

The increase in crude and ethylene costs raised PE production expenses and encouraged producers to maintain firm offers or seek further increases.

Higher freight costs added further support. Shipping costs and surcharges for Middle Eastern cargoes remained elevated amid ongoing regional conflicts, while freight rates from China increased due to port congestion and delays caused by multiple typhoons. Limited container and vessel availability increased transportation costs and lengthened delivery times, making Chinese PE cargoes less competitive.

Supply conditions vary by origin

PE offers from major origins were generally unchanged to $20-50/ton higher than the previous week. However, supply and logistics conditions differed significantly depending on the origin.

Middle Eastern cargoes continued to face substantial logistical and geopolitical uncertainty. Ongoing tensions involving the US and Iran complicated shipments, while higher freight costs and uncertain delivery schedules reduced the attractiveness of these cargoes. At the same time, suppliers were able to seek higher prices due to the firm supply situation.

A Saudi producer was reported to have offered competitive levels compared with other suppliers from the region, but it could not guarantee delivery schedules or final freight costs. Buyers could also face additional charges, including container imbalance, low-sulfur fuel and emergency-related surcharges. As a result, some buyers remained reluctant to purchase Middle Eastern material because of the additional cost and delivery risks.

Chinese cargoes, particularly LLDPE and HDPE film, remained available in Southeast Asia at relatively high price levels. Firmer Chinese domestic prices and increased freight costs caused by typhoon-related port disruptions provided further support to Chinese offers. However, the number of Chinese offers declined at the beginning of September, limiting availability from this source.

US-origin PE remained among the more competitively priced options in the region. Its price advantage offered some relief to buyers facing higher replacement costs, although longer delivery times remained an important consideration.

Buyers remain cautious despite firm market expectations

Weak demand and resistance to high prices continued to limit buying activity. Nevertheless, market participants generally maintained a firm near-term outlook because of rising upstream costs and selective supply constraints.

A trader noted that demand remained weak because prices were difficult for buyers to accept, but low inventories were forcing some buyers to purchase material based on immediate requirements. Another trader said high prices were discouraging significant restocking, with buyers preferring to maintain only minimum inventories.

Overall, the latest PE gains remain primarily cost- and supply-driven rather than demand-led. Strong upstream values and limited availability are expected to keep prices supported, while weak downstream consumption and buyer resistance should prevent any sharp increase in the near term.

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