Argus Polymers

Formerly Argus DeWitt Polymers

Issue 17-1 Thursday 5 January 2017

Key Prices

Polymer markets $/t

US monthly contract price Western Europe monthly Asia-Pacific cfr CMP
Timing Timing ±
EOR contract price spot current

LDPE liner film Dec 1,543-1,609 Dec 1,520-1,557 1,320-1,360 0.0

LLDPE butene Dec 1,389-1,433 Dec 1,456-1,504 1,120-1,160 0.0
HDPE BM Dec 1,389-1,433 Dec 1,451-1,504 1,100-1,140 0.0
HDPE injection Dec 1,411-1,455 Dec 1,461-1,520 1,090-1,130 0.0
PP copolymer Dec 1,113-1,179 Dec 1,350-1,398 1,090-1,130 0.0
PP raffia Dec 1,191-1,239 1,010-1,040 -15.0
PP homo, GP IM Dec 1,069-1,135 Dec 1,287-1,334
GPPS Dec 1,609-1,720 Dec 2,134-2,182 1,290-1,320 0.0
PVC pipe Dec 1,014-1,058 Dec 1,128-1,175 910-920 0.0

LLDPE butene global prices $/t

Highlights
cfr China spot current
Americas NWE monthly contract
„„ December PE contracts still not fully settled. US monthly contract
1,700
„„ PVC producers seek February price hike.
1,600
„„ PP prices expected to rise in January.
„„ PS January prices will rise on benzene. 1,500

1,400
Western Europe
1,300
„„ PE market quiet as participants return from holiday.
„„ PVC prices settle €15/t lower in December. 1,200
„„ December PP prices move down €30/t with monomer. 1,100
„„ PS producers lose margin in December despite €140/t price 22 Sep 16 27 Oct 16 01 Dec 16 05 Jan 17
increase.

Asia-Pacific
„„ PE prices are poised to decline on weak demand and falling
LLDPE futures.
„„ PVC is likely to extend losses on slow Chinese demand and Contents
Americas 2
the cash crisis in India.
„„ PP edged lower on weak fundamentals and expectations of Western Europe 4

a rise in supplies. Asia-Pacific 6

„„ PS values were supported in Asia by a firm SM market.

Copyright © 2017 Argus Media group

Argus Polymers Issue 17-1 Thursday 5 January 2017

Americas: Focus on polyethylene and polyvinyl chloride

Feedstocks US polymer markets

US ethylene contracts for December rose by 2¢/lb to 32.25¢/ Timing Monthly contract price ¢/lb

lb this week, following an uptick in spot prices after several LDPE liner film Dec 70-73
ethylene plants went down for maintenance. Spot prices have LLDPE butene Dec 63-65
LLDPE hexene Dec 65-67
started to rise in the new year, with January volumes trading
LLDPE octene Dec 67-69
between 28.25¢/lb to 29.5¢/lb on Wednesday.
HDPE injection Dec 64-66
US polymer-grade propylene spot material has begun HDPE HMW film Dec 65-67
strengthening in the new year, with January bids at 35.5¢/lb HDPE BM Dec 63-65
on Wednesday against no offers. PVC pipe Dec 46-48
US benzene January contracts settled in a split, up by 33¢/ PP copolymer Dec 50.5-53.5
USG and up by 40¢/USG to 267¢/USG and 275¢/USG, respec- PP homo Dec 48.5-51.5
PS crystal Dec 73-78
tively. Benzene increased as imports from South Korea were
PS high impact Dec 83-88
lower than anticipated, causing supply to tighten. Spot prices
continue to rise. US polymer spot export ¢/lb
fas/Houston bagged ±
Polyethylene LDPE liner film 54-55 0.0
US polyethylene (PE) contract negotiations for December are LLDPE butene 46-47 0.0
ongoing, with reports of a 2¢/lb decline and of flat pricing for HDPE injection 46-47 0.0
the month. Prices are expected to reach a final settlement HDPE HMW film 45-48 0.0
by the end of this week, as market participants work to close HDPE BM 46-48 0.0

the books on 2016. For now, the Argus December price still PVC pipe 36-37 -1.0

reflects a 2¢/lb price drop, but that could be revised upward

US PE production mn lb
by next week if there is further evidence that the majority of
contracts settled flat. 2015 2016
January pricing appears likely to hold steady, with no price 3,700
increase announcements for this month on the table. How-
3,600
ever, most producers, including Dow Chemical, ExxonMobil,
LyondellBasell, Nova and Formosa Plastics, have informed 3,500
customers they will implement a 5¢/lb increase, effective on 1 3,400
February. The proposed increases are based on rising ethylene
3,300
costs, potential feedstock tightness with planned cracker out-
ages, as well as an expected shift from a balanced to a tight 3,200
market as demand improves.
3,100
The market remains fairly balanced, for now, though pro-
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
ducers’ inventories are low after two months of heavy exports. — ACC/Vault
Spot availability has become more limited, and prices have
inched higher.
December sales data have not yet been released, but do- the American Chemistry Council’s Plastics Industry Statistics
mestic demand during the month was believed to be season- Group. Domestic demand in January is likely to remain season-
ally weak. However, export demand was thought to be strong ally weak, though the February price increase announcements
enough to make up for any drop in sales from November. could spur January sales.
Final November sales figures showed that total sales rose by Polyethylene production is expected to remain strong this
10.2pc compared with October, including a 32pc increase in month, particularly as Nova Chemicals ramps up its new Al-
exports. US producers added around 110mn lbs to inventories berta, Canada, capacity. Logistics backlogs at packaging ware-
In November, according to final data released this week by houses and at the Houston port could limit export options in

Copyright © 2017 Argus Media group Page 2 of 9

Argus Polymers
Americas: Focus on polyethylene and polyvinyl chloride
the near-term, which could cause some producers to consider
slowing their operating rates. Some upstream cracker outages
may limit production at downstream polyethylene units, but
the extent of any plant downtime could not be confirmed.
December production figures have not yet been released,
but there were no major outages, apart from a brief outage
at Dow’s Plaquemine, Louisiana, chemical plant early in the
month. Final November production data showed plants oper-
ated at near 96pc of capacity. Year-to-date 2016 production
through November was up by 1.5pc from 2015.
Export prices are expected to rise, but with warehouses
full, fresh offers have been scarce. Some producers are target-
ing an increase of as much as 3¢/lb for export prices.
Polyvinyl chloride
PVC contracts for December appear to be holding steady after
November’s 2¢/lb decline, with producers unwilling to offer
further price relief, particularly as feedstock ethylene costs
begin to rise. December ethylene contracts settled higher by
2¢/lb to 32.25¢/lb this week, and spot prices are climbing.
January spot ethylene traded at between 28.25¢/lb to 29.5¢/lb
on Wednesday, up from around 25¢/lb in mid-December.
January PVC contracts appear likely to hold flat with no
price increase proposals on the table. However, producers
have announced an increase of 4¢/lb, effective on 1 February.
The proposed increase is based on expectations for further
gains in ethylene costs, particularly with at least two large
cracker turnarounds scheduled this month.
December sales data have not yet been released, but while
demand was expected to improve from November, it was
still believed to be seasonally weak. Total sales in November
declined by 9.3pc compared with October, with domestic
demand down by 10.6pc and export sales 5.9pc lower over the
same period. Year-to-date 2016 demand through November
rose by 5pc for export and domestic sales. Demand in January
should improve amid optimism about the housing and con-
struction sector in 2017.
Construction spending in November was at a seasonally ad-
justed annual rate of $1,182.1bn, up by 0.9pc from the revised
October estimate and 4.1pc higher than in November 2015,
according to US Census Bureau numbers. Spending on private
construction rose by 1pc from October, while public construc-
tion gained 0.8pc from the revised October estimate. Market
participants are optimistic that the construction sector will
show even more strength, with increases expected in housing
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Issue 17-1 Thursday 5 January 2017
PVC production mn lb
2015 2016
1,400
1,300
1,200
1,100
1,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
— ACC/Vault
and infrastructure spending, which are large markets for PVC.
December production numbers are not available, but
operating rates last month were affected by upstream main-
tenance at vinyl chloride monomer plants and a turnaround
at a Louisiana PVC unit. Final November data showed produc-
tion declined by 5.8pc from October, with plants operating
at 81.2pc of capacity. Production this month is expected to im-
prove from December. However, one producer may have to cut
operating rates because of an upstream cracker turnaround
this month.
Export prices have declined slightly from the end of
December levels to around $800-810/t fas Houston. However,
with lower Asia-Pacific prices, there may be less appetite for
US material. Export volumes should remain strong in January.
Polypropylene: Supplemental
December polypropylene (PP) contracts settled in a wide
range, with many contracts tracking the 4¢/lb decline in De-
cember polymer-grade propylene (PGP) contracts, but others
that had already received significant price reductions earlier
in the year got a lesser decline. The price movements gener-
ally keep producer margins stable, ending margin compression
from earlier in the year.
Prices this month are expected to increase, as PGP prices
strengthen. January PGP bids rose to 35.5¢/lb against no offers
on Wednesday, higher than the December contract price of
31.5¢/lb. Total Petrochemicals this week said it will increase
prices for all grades of PP by the amount of monomer move-
ment from December to January.
Argus Polymers Issue 17-1 Thursday 5 January 2017

Americas: Focus on polyethylene and polyvinyl chloride

December production figures are not out yet, but produc-
ers were believed to have continued their reduced operating
rates from November, when plants ran on average at 80.5pc of
capacity. Producers do not want to rebuild significant invento-
ries.
Strong demand is expected to return this quarter, which
could result in tighter supplies. That could allow producers to
raise margins. However, the threat of returning imports will
limit how much producers will attempt to boost margins.
Polystyrene: Supplemental
After contracts settled flat for December, US polystyrene
prices are poised to increase this month, with producers an-
nouncing price hikes of 5-6¢/lb. The proposed price hikes are
based on higher benzene costs, with January benzene con-
tracts settling in a split, up by 33¢/USG and up by 40¢/USG to
267¢/USG and 275¢/USG, respectively.
Every 10¢/USG movement in benzene usually translates
into a 1¢/lb movement for polystyrene. When combined with
the December increases of 11¢/USG and 15¢/USG, along with a
2¢/lb rise in ethylene costs, the higher January prices should
help cover the increase in feedstock costs.
December sales numbers are still to be released, but
demand was expected to show typical seasonal weakness.
Demand this month should also remain relatively weak on the
same seasonal factors, particularly with the price increase on
the table. Demand typically begins to ramp up in late February
or March in advance of the busy spring disposable season.
No major production problems were reported, and supply
and demand should remain balanced this month.

Europe: Focus on polyethylene and polyvinyl chloride

Feedstocks Western Europe polymer markets €/t

Timing Monthly contract price ± from Nov
The January ethylene monthly contract price (MCP) was
settled at €985/t, €45/t higher than December, reflecting an LDPE liner film Dec 1,435-1,470 -30.0
escalation in feedstock costs. The market has been quiet since LLDPE butene Dec 1,375-1,420 -30.0
HDPE injection Dec 1,380-1,435 -30.0
the beginning of the month with no significant production is-
HDPE HMW Film Dec 1,365-1,425 -30.0
sues.
HDPE BM Dec 1,370-1,420 -30.0
The propylene MCP also increased by €45/t in January, PVC pipe Dec 1,065-1,110 -15.0
with little activity since before the Christmas holidays. PP copolymer Dec 1,275-1,320 -30.0
The January styrene MCP rose by €105/t from December, PP raffia Dec 1,125-1,170 -30.0
reflecting an increase of around €50/t in the NWE spot price PP homo Dec 1,215-1,260 -30.0

last month, as well as a €175/t upward movement in the MCP
of principal feedstock benzene. The spot price has continued
to increase in January despite high styrene margins encourag-
ing strong European production, supported by high prices in
the Asia-Pacific market.
Polyethylene
PE producers have announced bullish price intentions as the
market returns from the Christmas holiday period, although
a clear picture for January is unlikely to emerge until week
two at the earliest. Many buyers will operate at low rates this
week, awaiting the return of staff from annual leave, while
the Epiphany holiday on 6 January and Orthodox Christmas
on 7 January are further constraining production and con-
sumption in southern and eastern Europe. Several sellers
have announced price increases of €60-70/t after the January
PS crystal Dec 2,015-2,060 +140.0
PS high impact Dec 2,105-2,150 +140.0
ethylene MCP settled €45/t higher than December, although
buyers will target an increase in line with ethylene as a maxi-
mum. Producers that are preparing for and are constrained by
upcoming maintenance are likely to be firmer in January price
negotiations.
Producers will aim to expand their margins in the first half
of this year to regain some of their losses from the second half
of 2016. They will be helped by robust contractual demand –
largely in line with last year – while a busy turnaround sched-
ule has the potential to exacerbate shortages created by any
unplanned issues during the spring. The maintenance schedule
will begin in March, taking 5.9pc of total capacity off line in
the second quarter – the largest percentage in one quarter

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Argus Polymers
Europe: Focus on polyethylene and polyvinyl chloride
HDPE BM premium to C2 NWE €/t
Gross premium (right)
HDPE BM gross contract del NWE (left)
Ethylene MCP (left)
1,750 700
1,500 525
1,250 350
1,000 175
750 0 together. Sellers lost €5-10/t versus ethylene on a gross basis
Jan 14 Jun 14 Nov 14 Apr 15 Sep 15 Feb 16 Jul 16 Dec 16
since the fourth quarter of 2006. Three of the crackers with
planned turnarounds are in the ARA region, meaning that any
delays or production issues at any other crackers will have a
disproportionate tightening effect on feedstock supply to PE
producers in the region. At least three PE plants in the ARA
region will also have planned turnarounds during this period,
along with another two plants at a site closer to central Eu-
rope.
The volume of incremental imports that would help to
bridge any unexpected supply gaps is also likely to be fairly
low in the early part of 2017. High Chinese spot prices in No-
vember and December – when volumes for arrival in January
and February would have needed to be fixed – set the offer
price for marginal imports at an unattractive level for most
European buyers at that time. The recent drop in the value of
the euro against the dollar – the exchange rate has reached
its lowest since early 2003 this month – will further reduce
the competitiveness of imports. Lower imports owing to the
devaluation of the euro against the dollar played a significant
part in the shortages of spring 2015.
Initial order entry for January may be slightly lower than
is customary for the time of year, when buyers typically need
to replenish their stocks having emptied warehouses to meet
end-of-year inventory targets. Some converters have higher
stocks than they usually would at the beginning of the month,
after they eschewed destocking during December in anticipa-
tion of January’s ethylene MCP increase. This is particularly
true for larger converters that have more flexibility with end-
of-year working capital. But the busy turnaround season and
potential for tightness may play on some buyers’ minds before
they decide to deplete their stocks too much.
Copyright © 2017 Argus Media group
Issue 17-1 Thursday 5 January 2017
Polyvinyl chloride
The PVC market remains very quiet in January, with the num-
ber of market participants that are yet to return from holidays
obscuring the demand picture and delaying initial price discus-
sions. December prices largely fell by €15/t with monomer,
with some variation between individual customers based on
their November agreement. Downstream restocking in January
typically counteracts weak demand in December – caused by
converters lowering their working capital position before the
end of the year – so producers often consider the two months
in November and December, so will be particularly keen to
raise prices by more than half of the €45/t ethylene MCP
increase in January. Buyers will wait to see whether demand
lives up to forecast before formulating firm price targets.
PVC margins remain very healthy despite producers’ slight
losses towards the end of 2016. Although demand did not pick
up noticeably between 2015 and 2016 — and higher volumes
of imports and recycled material accounted for most of the
growth — producers were able to increase margins in the
first half of the year and largely maintain them in the quieter
second half. Initial contract nominations for 2017 are roughly
the same as those at the beginning of 2016. Many convert-
ers in the pipe industry did not need all of their contracted
material in 2016 as a lack of new building projects weighed on
demand in the second half of the year, but by nominating the
same amounts again they are demonstrating their optimism for
an upturn. Production in the southern European construction
industry showed signs of picking up in 2016, and there is hope
that central and eastern Europe can recover from its recent
slump.
Eurozone PMI manufacturing - forward trend PMI (Mfg)
Eurozone manufacturing PMI
Poly. (Eurozone manufacturing PMI)
60
54
48
42
36
30
Jan 07 Dec 08 Dec 10 Dec 12 Dec 14 Dec 16
— Markit
Page 5 of 9
Argus Polymers
Europe: Focus on polyethylene and polyvinyl chloride
More general economic data continue to display cautious
optimism for recovery in Europe. The December eurozone
manufacturing PMI of 54.9 was the highest since April 2011
with improvements in all countries surveyed. The euro-dollar
exchange rate — which stands at its weakest level since Febru-
ary 2003 in January — has helped by deterring imports while
improving European export competitiveness. Specifically in the
PVC industry, the weak euro has contributed significantly to an
increase in the attractiveness of sales to Turkey, which offered
commensurate or higher netbacks to European sales for most
of 2016. This reduces the pressure on producers in monthly do-
mestic contract price negotiations — particularly in the south
of Europe where exports to Turkey are logistically easier — and
was a factor in their preservation of margins despite remark-
ably stable production in the second half of 2016.
Polypropylene: Supplemental
The PP market is balanced at the beginning of 2017. Prices
moved down by €30/t in line with monomer in December,
despite most producers initially hoping for a smaller decline
or a rollover. Some buyers looked to buy more material in
December, anticipating the €45/t increase in the January pro-
pylene MCP, but found incremental availability to be limited
by manufacturers recovering from earlier production issues
Asia-Pacific: Focus on polyethylene and polyvinyl chloride
Feedstocks
Ethylene: Asia’s ethylene prices remained stable, with mar-
ket participants only just returning from holiday. Demand is
expected to slow down in the run up to the lunar new year
holidays on 28 January. But supply may also decline, particu-
larly in southeast Asia and Taiwan where major crackers are
undergoing turnarounds.
Propylene: Northeast Asia’s propylene market was stable.
Trading was subdued at the start of the new year, but prices
were supported by continued high derivative operations. Pro-
pylene prices in southeast Asia rose as demand from Indone-
sian consumers showed an apparent increase.
Styrene: SM prices in Asia were largely rangebound at
around $1,200/t cfr China, supported by balanced-to-tight
supplies and firm upstream markets. But demand is expected
to weaken from some styrenics producers in January ahead of
the lunar new year holidays.
Copyright © 2017 Argus Media group Page 6 of 9
Issue 17-1 Thursday 5 January 2017
or preparing for maintenance in the first half of this year.
The maintenance season starts earlier for PP than PE, with a
Belgian plant scheduled to begin a month-long turnaround in
the middle of January, and is likely to keep propylene tight
until the summer. While planned maintenance alone should not
lead to shortages, it can reduce the flexibility of the market to
bridge any unplanned supply constraints.
Polystyrene: Supplemental
A second consecutive three-figure increase in the styrene MCP
will create further problems for PS producers in January, after
they were forced to deal with a €170/t upward styrene move-
ment last month. A range of price settlements occurred last
month, but on average producers fell short of passing through
the full cost increase to their customers as prices increased
by €140/t. A true picture of January demand will not emerge
until consumers — particularly those in central and southern
Europe — return from the Christmas holiday period. Production
of HIPS is slightly constrained by an unplanned shutdown of a
line at a French plant that occurred on 1 January. The line is
expected to stay down for three weeks, although so far buyers
have not suffered significant shortages as a result. Producers
have announced that they will raise prices by €110-125/t in
January, following the €105/t increase in the styrene MCP.
Polyethylene
Prices of imported polyethylene were stable to firm this week.
Offers at the lower end were limited with cargoes arriving
from Iran, the US and India sold out. Producers maintained
firm offers amid cost pressures. But the outlook remains weak
because of falling linear low-density polyethylene (LLDPE)
futures prices and amid weaker seasonal demand. High-density
polyethylene (HDPE) film prices have firmed by $20/t to $1,120-
1,160/t. Low-density polyethylene (LDPE) and LLDPE prices
were steady at $1,320-1,360/t and $1,120-1,160/t respectively.
Demand has fallen as liquidity is squeezed around the
year-end holidays. Consumers have weaker buying intentions
because of rising raw-material prices. Orders of agricultural
films are likely to slacken in the run-up to the lunar new year
break in late January. Trading activity will fall from mid-
January and will be completely muted during the lunar new
year holidays, which start on 27 January. Speculative trading
Argus Polymers Issue 17-1 Thursday 5 January 2017

ASIA-PACIFIC: FOCUS ON POLYETHYLENE AND POLYVINYL CHLORIDE

Asia non-integrated PE cash margin $/t Asia-Pacific polymer markets $/t
Prices ±
Non-integrated PE cash margin (right) LLDPE (left)
HDPE (left) LDPE (left) China spot cfr CMP
1,800 200 LDPE liner film 1,320-1,360 0.0
1,700 LLDPE butene 1,120-1,160 0.0
100 HDPE injection 1,090-1,130 0.0
1,600
HDPE HMW film 1,120-1,160 +20.0
1,500 0 HDPE BM 1,100-1,140 0.0
1,400 PVC pipe 910-920 0.0
1,300 -100 PP copolymer 1,090-1,130 0.0

1,200 PP raffia 1,010-1,040 -15.0

-200 PS crystal 1,290-1,320 0.0
1,100
PS high impact 1,340-1,370 0.0
1,000 -300 Southeast Asia spot cfr
15 Oct 12 09 Jul 14 13 Nov 15 05 Jan 17 LDPE liner film 1,280-1,320 0.0
LLDPE butene 1,160-1,200 0.0
HDPE injection 1,140-1,170 0.0
has eased against the backdrop of a falling futures market. HDPE HMW film 1,150-1,190 0.0
The Chinese government is making efforts to curb air pollution
in north China, forcing some smaller petrochemical converters China ex-works
to shut down or reduce operating rates, which has also limited Import parity
Yn/t ± ±
$/t
demand.
PP raffia 8,600-9,000 -350.0 990-1,037 -31.0
Supplies of imported cargoes have eased since the end of
PP copolymer 9,400-9,800 -200.0 1,084-1,130 -12.0
2016. LDPE availability has slowly increased, with more sup-
HDPE HMW Film 10,300-10,500 -50.0 1,189-1,212 +6.0
plies expected in the coming weeks. Supplies of lower-priced LDPE liner film 11,600-12,200 -250.0 1,340-1,410 -16.0
cargoes from the US and Brazil have been limited. Domestic LLDPE butene 9,800-10,300 -125.0 1,130-1,189 -3.0
supply is growing with the start of new capacity in the fourth PVC pipe 7,600-7,700 0.0 874-886 +9.0
quarter of 2016. Pucheng Clean Energy has been shut down PS crystal 11,300-12,000 0.0 1,305-1,387 +13.0

since 25 December, but will restart in January. The impact on PS high impact 12,000-12,800 0.0 1,387-1,480 +14.0

the market is minimal.

LLLDPE prices have fallen by Yn125/t from last week to Outages
Yn9,800-10,300/t ($1,130-1,188/t). HDPE film prices slipped to Shutdown Plant KTA Duration

Yn10,300-10,500 ($1,188-1,221/t), while LDPE prices declined to PetroChina Daqing HD-LLD 300 Dec25-Dec30
Yn11,600-12,200/t on increasing supplies. Shenhua Xinjiang HD-LLD 300 October

Non-integrated PE margins have dropped to negative levels Pucheng Clean energy HD-LLD 300 Dec25-Jan
Lanzhou PC HDPE 180 Jan5-Jan10
because of a relatively stable upstream. Regional producers
are willing to lower offers in light of weak Chinese demand and
poor margins. Despite this, imported PE is firmer than supplies Demand in Vietnam is likely to slow from mid-January with
from domestic sellers. fresh purchasing expected again in February. Stocks are mostly
In southeast Asia, PE was steady amid the continuing lull balanced for all major grades in Indonesia and Vietnam. But
from last week’s holidays. Trading is expected to start from fresh arrivals in February are expected to raise stock levels in
next week with fresh offers for February and March due to Vietnam, which may pressure prices in that market.
emerge in mid-January. LDPE film supplies remain mostly tight because of reduced
But expectations are mostly bearish for January and Febru- supplies from the Middle East. HDPE and LLDPE film and
ary because of the impact of the lunar new year holidays cele- injection molding supplies are balanced, compared with slow
brated in countries including Singapore, Malaysia and Vietnam. demand in southeast Asia.

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Argus Polymers
ASIA-PACIFIC: FOCUS ON POLYETHYLENE AND POLYVINYL CHLORIDE
Polyvinyl chloride
The Chinese polyvinyl chloride (PVC) market was steady fol-
lowing previous falls. Trading sentiment also strengthened
while the low offers seen previously have been removed from
the market. Deals remain limited ahead of the new year holi-
days, which will reduce buying activity from mid-January until
mid-February.
Weaker PVC futures and falling carbide prices sent carbide-
based PVC prices lower to Yn6,800-6,900/t last week, with
prices remaining at similar levels this week. Prices have fallen
by Yn1,900/t from their peak in mid-November. Ethylene-
based PVC also fell to Yn7,900-8,000/t or $909-920/t. Domestic
ethylene-based PVC is trading at the same level as imported
material after the recent price slump.
Carbide-based PVC export prices have dropped to $820-
830/t fob while export volumes have also fallen. Operating
rates at local producers remain high. But most supplies are still
being sold in the domestic market, leaving limited volumes for
export. Export prices for Chinese origins are not competitive
with other supplies.
The import market has remained unchanged since Formosa
lowered its January offers to $920/t. Market participants said
Taiwanese offers may be adjusted again for February deliv-
ery, under pressure from a falling Chinese carbide-based PVC
market and the Indian cash flow crisis. Offers from Japan have
emerged at $920-925/t, following the trend in Taiwanese sup-
plies. The outlook for imported PVC remains bearish amid the
continuing slow season.
The Indian market has continued to weaken as a result of
the cash flow crisis that started in early November, which has
Asia non-integrated PVC cash margin
PVC cash margin (right) PVC cfr China (left)
1,100 200
1,000 100
900 0
800 -100
700 -200
31 Mar 14 01 Apr 15 02 Mar 16 05 Jan 17
Copyright © 2017 Argus Media group
Issue 17-1 Thursday 5 January 2017
limited trading volumes. Indian domestic-origin cargoes are
trading at $1,000/t. Taiwan-origin offers dropped to $920/t but
trading volumes have slipped during the crisis. The southeast
Asian PVC market also eased with falling Formosa offers. Main-
stream prices declined to $920/t cfr southeast Asia.
Upstream, EDC prices fell to $260-270/t cfr northeast Asia
while VCM prices dropped to $790-800/t. PVC margins have
slipped recently from the highest point reached last year.
Polypropylene
Prices of PP cargoes imported to China softened this week on
a seasonal fall in demand. Downstream converters may start to
shut down in the third week in January for the lunar new year
holiday. The market will be completely quiet during the of-
ficial holiday from 27 January to 2 February and may only fully
resume in mid-February. The slide in PP futures also damp-
ened trading sentiment.
Homo-polymer values eased by $10/t to $1,010-1,040/t,
with some lower end offers from Russia at $1,000/t. Co-poly-
mers were steady at $1,090-1,130/t. Demand continued to fall
as the lunar new year holidays approached. Ningbo Fuji, a new
PDH producer, is running its PP unit at an 80pc operating rate.
Oriental Yangzijiang restarted its 400,000 t/yr PP unit this
week. The outlook is bearish on expectations of slow seasonal
demand and incremental capacities due to start up in China.
PP raffia spot prices slumped to 8,600-9,000 yuan/t ex-
warehouse ($990-1,037/t on an import parity basis) in east
China, dragged down by the futures market. Prices were lower
by Yn350/t from the same period last week. Co-polymers also
dropped to Yn9,400-9,800/t, along with falling futures. The
trend for the import market is steadier. Domestic prices are
$/t
now lagging behind import cargoes by $3-12/t as new capaci-
ties starts up in China.
PP prices in southeast Asia were largely stable this week
amid sluggish trading. New offers are expected to emerge
within the next two weeks. PP supply remains as ample in this
region and this is expected to continue following the start of
new MTO plants in China and new units in India in this quarter.
Polystyrene
Imported polystyrene (PS) prices in China remained steady,
supported by a firm upstream market. SM remained well sup-
ported in Asia on balanced-to-tight supply and steady demand
from China.
Page 8 of 9
Argus Polymers Issue 17-1 Thursday 5 January 2017

Asia-Pacific: Focus on polyethylene and polyvinyl chloride

Imported general purpose polystyrene (GPPS) prices re-

mained at $1,290-1,320/t, while high-impact polystyrene (HIPS) Announcements
prices were unchanged at $1,340-1,370/t. Major Taiwanese
producers have maintained offers at $1,350/t and $1,420/t for Argus is uniting its businesses under a single brand name.
GPPS and HIPS respectively. Deals may have been concluded From January 2017, the name of Argus DeWitt Polymers
at a $10-20/t discount. Non-integrated PS margins rebounded will change to Argus Polymers. Please contact info@argus-
to $30/t, an improvement compared with previous negative media.com if you have any questions.
levels.
Demand has slowed after year-end orders have been
fulfilled. Consumers have reduced prompt purchases and kept
inventories low. The market will be muted from mid-January
because of lunar new year holidays.
The outlook is bearish as the upstream market is expected
to weaken in the near term. GPPS slipped to Yn11,400-12,100/t
($1,316-1,398/t), while HIPS was trading at Yn12,000-12,800/t
amid limited deals done.

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