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Asia ethylene prices to ebb on dwindling Chinese imports

December 15/2010

(ICIS) -- Asian ethylene prices are likely to ebb for January-delivered cargoes, as the robust Chinese import demand is seen fizzling out on a weakening downstream domestic market, traders said on Wednesday.

For January, top energy user China is expected to reduce spot ethylene imports to possibly 4,000-5,000 tonnes, following a hefty purchase of 10,000 tonnes or more for December delivery to plug a domestic shortfall, they added.

Prices of ethylene - the basic petrochemical building block - were assessed at  $1,150-1,170/tonne (?863-878/tonne) CFR (cost and freight) Northeast (NE) Asia on Wednesday, down $20-30/tonne from levels earlier in the week, ICIS data showed.

Reflecting a weakening market, Asian polyvinyl chloride (PVC) prices were expected to drift lower due to the softening domestic prices in China, traders said. Plus, with the upcoming long Chinese Lunar New Year holidays in early February, buyers could defer their purchases until after the holiday. As a result, demand for January PVC cargoes were expected to be weak, they said.

Furthermore, news that China had met its energy saving and emissions reduction targets, led to market players beliefs that the power rationing policy would be relaxed or even stopped by the end of the year.

This would lead to increased chlor-alkali operating rates, which would result in an excess supply of PVC from China, further exerting downward pressure on PVC prices, traders said.


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