|
(plastemart) -- The arbitrage
opportunity to move polyethylene cargoes from China to Southeast Asia is open,
but cargo flow is still limited.
Traders are mainly moving linear low
density polyethylene (LLDPE) from Chinese bonded warehouses to Southeast Asia,
in a practice called "re-exporting." The main factor behind this has largely
been slow PE demand in China due to lower-than-usual orders for finished
products. Concurrently, this is the conventionally low demand season between
April and May for the PE market.
This has caused a big gap between prices of ex-warehouse cargoes and shipment
cargoes. China has been closed for a public holiday Monday to Wednesday,
preventing any price movements.
PE in Southeast Asia has been on an
uptrend due to tight local supply, particularly in Indonesia where domestic
production has been low, especially of LLDPE, due to poor margins. Market
sources were unable to pinpoint exactly when the arbitrage window opened, but
have seen movements over the last two weeks. Traders in China prefer to hold on
to their lower cost cargo. |
