1. PC0100
ANALYSIS:AsiaPEprice to reboundQ4 on seasonal demand,butmacroeconomicsmayhinder
Singapore (Platts)--10Sep2015/327 am EDT/727 GMT
Spotpolyethylene pricesinAsialooksettoreboundinthe fourth
quarteron higherseasonal demandandholidayrequirements,butanyupside is
likelytobe limiteddue toweakerregionaleconomies,devaluationof
currencies,fallingfeedstockpricesandnew PEplantscomingon stream, trade
sourcessaidthisweek.
InChina,PE demandtypicallyincreasesduringwinter,whenagricultural
mulchfilmsare usedto covercrops inthe northernregion,while inIndia,
buyerstypicallystockuppriorto the Hindufestival of Deepavali,whichis
inNovemberthisyear.
PE inventoriesacrossAsiaare currentlyrelativelylow,accordingto
marketsources,withspotbuyinglimitedamidweakdemandanddeclinesin
equitymarkets.
Highdensitypolyethylene priceshave lost$205/mt, or 15%, since June 3
to $1,140/mt CFR Far East Asia(China) asof September9.
The upcomingweek-longNational DayholidayduringOctoberinkeymarket
Chinaisnot expectedtohave muchof a dampeningeffectontrade flowsor
activity,asmost participantshave deliveriesplannedaroundthe holidays.
Additionally,the price differential betweenyuan-denominatedcargoesand
US-dollarparcelsshoweditwasstill profitabletoimport -- at over$100/mt.
DomesticHDPE cargoestradedat Yuan 10,000/mt ex-worksineastChina,which
isequivalentto$1,262/mt CFR Chinaon an importparitybasis.HDPE prices
were assessedat$1,140/mt CFR Far East Asia(China) Wednesday,up$10/mt week
on week.
VariousPEplantshutdownsinQ4 are alsoexpectedtotightenthe market.

2. Thailand'sPTT Global Chemical planstoshutone of twolinesat its500,000
mt/yearHDPE plantfor 17 daysfrom September19 and Indonesia'sChandraAsri
has plannedfor90 days of steamcracker maintenance fromSeptember24.
Lookingahead,althoughIranwasa leadingglobal producerof HDPEand
LDPE, mostmarketparticipantsare not worriedaboutan influx of Iranian
supplypost-liftingof sanctions,pointingoutthatmost Chinese andIndian
buyershadcontinuedtotransact withIranianproducers.
MACROECONOMICSIMPACT
The overall healthof the Asianeconomy,however,remainspoor,both
producersandend-usersagreed.China'sPurchasingManagers'Index fell to
49.7 in Augustfrom50.0 the previousmonth,putting downwardpressure on
buyingappetite forPE.Chinaisthe biggestsingle consumerof PEglobally.
The downstreamsectors -- automobiles,constructionandpackaging -- are
reportedtobe decreasingplantoperatingratesdue tothe slowdowninthe
Chinese economy,dampeningPEdemand.
The end-usersegment'splantoperatingrates,however,differ,according
to the size and financial statusof the companies.Bigpackagingfilmmakers
were heardto have stable businesses,runningtheirplantsathigh ratesof
70-80% of capacity.Some of the small plasticconverterswere heardtohave
shuttheirplantsdue to lowpurchase orders,marketsourcessaid.
The devaluationof Asiancurrenciesagainstthe USdollarhasalso
weighedheavilyonregional PEmarketssince all Asianmarketsare major
importersof the PE commodityresin.A depreciatedcurrencyweakensthe
country'sappetite forimports.
Coal-to-polyolefinsproductionwasrunningathighrates,as
the devaluedyuanhelpedtopushdownproductioncosts,traderssaid,adding

3. that there isa highpossibilitythatChinamayturn intoa PE exporternext
year.
Naphtha-basedpolymerplantswere alsorunningathighrates,giventhe
lucrative naphtha-PEspreadof more than$700/mt, observerssaid.The dropin
feedstockcostmayhelptolowerPE prices,traderssaid.BetweenJune3and
September9feedstocknaphthapriceshave fallenaround22% to $451.875/mt CFR
Japan,while ethylenepriceshave plummetedby42.5% to $810/mt CFRNE Asia.
Feedstock makesupabout70% of total downstreamoperational costs,according
to some plasticconverters.
Additionally,new capacitiesinAsiaandthe Middle EastinQ4 will
likelyaddpressure tothe uptrend -- ChineseJiutai EnergyInnerMongolia's
300,000 mt/yearcoal-to-polyethyleneunitissettostart productionthis
monthand Saudi Arabia'sSadara Chemical planstobringonstreamits 350,000
mt/yearLDPE plantand 750,000 mt/yearLLDPE plantinJubail Industrial City
by the endof the year.
--HengHui,hui.heng@platts.com
--EditedbyGeethaNarayanasamy,geetha.narayanasamy@platts.com