Slow Asian polymer market demand expected before Lunar New Year
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- Published on Tuesday, 10 January 2012 00:02
ASIA – Polymer companies in Asia are bracing themselves for a slowdown in market demand that is expected to last until at least after the Lunar New Year holidays in mid-February.
Demand in the last months of 2011 has been disappointing, say Asian polymer suppliers, and business is not expected to pick up this short-trading month because of the upcoming Chinese New Year holidays (starting 23 January, for 15 days).
According to a Malaysian distributor, domestic producers have reported a low demand in the local market, forcing them to lower the prices of their PP and PE: “We believe that most buyers will only be active for about two weeks this month due to the Chinese New Year holidays and we expect most buyers to purchase in smaller than normal amounts,” he said.
Another Malaysian plastic packaging converter also said that they are not planning to buy any material before the Chinese New Year, as they believe prices will drop in the beginning of February. The company said it has already amassed enough raw materials to meet their production needs in the coming month.
Polymer demand in China has also been sluggish due to the slowdown in the Mainland’s economy, in turn affecting demand, particularly for PVC for the construction sector.
Locally-held LLDPE prices in China were stable to slightly firmer in the last week of 2011 on the back of firmer LLDPE futures prices and speculation that the LLDPE market might be near the bottom, although LDPE and HDPE prices were stable to softer on the week.
“LLDPE prices have moved higher as LLDPE demand is relatively better than demand for other PE products,” commented a distributor who lifted his LLDPE prices. “But LLDPE demand is still disappointing and we are not planning to make any fresh purchases given the gloomy global economic outlook.”
Stronger upstream feedstock cost have led players in the industry to forecast much firmer prices of PS and ABS at the start of the year, but outlook for these products are reportedly poor due to the upcoming Chinese New Year.
“We left our prices unchanged this week as we did not want to scare away buyers in the last week of the year. We feel that demand will not prove strong enough to support any major up-tick in prices over the near term,” a Chinese producer reportedly said.
One producer who increased their prices just this week said that their sales was not what they have expected and was only able to strike some deals this week.
In Southeast Asia, converters are forecasting much firmer PS prices while adding that they did not make any fresh purchases at higher offer levels
One converter in Malaysia said, “We are planning to wait until after the holidays before making any fresh purchases as we want to track the market movements for a while longer.”
