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US polyethylene exports finding market in Asia: sources

Houston — US polyethylene exports were workable to Asia, with some US-based traders deeming China and Southeast Asia the more preferable destination for resin, sources said Wednesday.

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Latin America has been the primary outlet for US exports for much of the year, with exporters finding it difficult to compete in other global markets since the second half of 2014 as lower oil pushed resin prices down in Asia, the Middle East and Europe.

But a tighter global market has made things more competitive for US resin, particularly with producer inventories rising in recent months, which has meant good availability for exporters on most grades of polyethylene, sources said.

While US PE continued to move to West Coast South America, Central America and the Mercosur region, some sources said they were getting better net backs to China, making it a preferred trade partner.

"Latin America is the lowest price in the world right now," a US-based trader source said, adding that Asia would be a more profitable option for sellers with the ability to move resin there.

Freight rates from the US to China were talked at $50-$60/mt, with US routes to Brazil at $65-$85/mt cost, Peru at around $100/mt and Central America around $110/mt, per market feedback.

Asian polymer prices have risen in recent weeks on higher feedstock costs and supply shortages brought on by planned maintenance during the second quarter.

Southeast Asia polyethylene prices were assessed Wednesday at $1,315/mt CFR FE Asia and $1,355/mt CFR SE Asia for low density polyethylene, while high density polyethylene blowmolding prices were assessed at $1,305/mt CFR FE Asia and $1,325/mt CFR SE Asia.

By comparison, US export prices were last assessed Tuesday at $1,235/mt FAS Houston for LDPE and $1,213/mt FAS Houston for HDPE blowmolding. Even with financing fees and profit added to that price, US-based traders said deals were workable.

While European markets remained tight in the wake of multiple production issues in the region, sources said exports from the US remained difficult because of duties and environmental regulations. One US-based trader said deals to Europe were possible, but others said Europe was more likely to buy resin from Korea because there would be no additional import fees.

Any US resin that does find its way to Europe would likely be done through internal company transfers by producers with capacity in both regions, sources said.

--Chris Ferrell,
--Edited by Derek Sands,