Market and product

Asian PE prices are going to be more volatile this year because of a low cargo buffer and the likelihood of a post-sanctions rise Iranian supply, market participants said on the sidelines of the ChinaPlas 2016 conference in Shanghai on Monday.

In view of risk adversity, no one is keeping a cargo buffer and people are going to buy on a just-in-time basis, sources said.

"This year many people are more fearful, risk averse and afraid to stock up in case they lose money on inventory," a trader said. "This results in herd buying or selling activity, hence volatile," he said.

Traders said Iran will likely flood shores of Southeast Asia, Northeast Asia excluding China and Western Europe, bringing down prices in those regions.

Japan, South Korea Southeast Asia and Western Europe were places which did not have Iranian PE cargo shipments because of sanctions.

"We are in discussions with them [Iranian]," a major South Korean producer said.

An Iranian supplier denied the allegations, saying they have always sold PE resin on a publication-linked formula, therefore neither determining any market prices nor dumping.

Market participants said it was typical for producers to sell at lower prices initially to gain market share, particularly for new plants.

The other factors contributing to price volatility will still apply -- monetary easing,currency fluctuations against the US dollar and Dalian futures, sources said.

In late February/early March, the Chinese authorities loosened controls on brokerages lending money to investors buying. This caused weekly LLDPE prices to surge $74 from mid-February to $1,146/mt CFR FE Asia when last assessed last Wednesday.

The depreciation of most Asian currencies against the US dollar had dampened import buying appetite this year, sources said.

It was well known in the market that local Chinese cargoes tended to follow the Dalian futures day to day price trends.

Domestic prices fell Yuan 125 at Yuan 9,375/mt ex-tank for HDPE film grade for May delivery while the Dalian Futures Commodity exchange had fallen around Yuan 390/mt for April to date.