Asian Plastic Buyers Back Off as Prices Reach Record Highs

Asian Plastic Buyers Back Off as Prices Reach Record Highs

Spot prices for most polymers in Asia have weakened by $ 10-$ 50/m.t. in the past two weeks after hitting record highs, market sources say. "Buyers have slowed down on purchases because of the price levels and are not accepting higher prices," one trader in Asia says. "We need to wait a couple of weeks for the producers' reaction; they remain bullish now," the trader says. Polyethylene (PE) prices have drifted down $ 10-$ 20/m.t., depending on grade, and polypropylene (PP) $ 50-$ 60/m.t. in the last three weeks in response to buyers' retreat.

Polymer prices reached their highest level in mid-February since the previous peak in 1995 as rising feedstock costs coincided with strong demand and tight supply, sources say. PE prices have risen to $ 900-$ 950/m.t. c&f up 45%.

PP prices also touched record highs of $ 900-$ 920/m.t. c&f, further boosted by extremely tight propylene supply worldwide, and higher propylene feedstock prices, sources say.

Polyvinyl chloride (PVC) prices have been on a steep increase since last October, as energy shortages in China forced the cutback of several vinyls plants in China, sources say. The production snags coincided with rising demand resulting from an improved economy, driving up PVC prices to $ 900-$ 910/m.t. c&f in mid-February. PVC prices have also slipped since then, by about $ 20/m.t., to $ 880-$ 890/m.t. c&f last week.

Polymer producers have shown no signs of ceding to buyers' lower price expectations, analysts say. Inventories are low and producers feel that most buyers cannot remain on the sidelines for very long unless they curtail their own production, market sources say.