China HDPE prices near 5-year low on weak demand, capacity expansions

Prices of high-density polyethylene (HDPE) in China hit a near five-year low due to slow demand and excess supply amid several major capacity expansions in the country, as per Chemweek.

Platts assessed HDPE film at $875 per metric ton on Feb. 7, the lowest level since June 2020. This comes just a month after HDPE film prices fell to more than a one-year low in December 2024. Platts, a division of S&P Global Commodity Insights, assessed HDPE blowmolding CFR Fareast Asia at $865 per metric ton and HDPE injection at $855 per metric ton, the lowest levels since August 2020. HDPE yarn was assessed at $905 per metric ton, the lowest since December 2023.

Yulong Petrochemical began commercial operations at its new 300,000 metric tons per year HDPE unit and two 500,000 metric tons per year HDPE/linear low-density polyethylene (LLDPE) swing units in Yantai in early January. Baofeng Inner Mongolia also has two 550,000 metric tons per year HDPE/LLDPE swing lines slated to start in 2025, said sources.

Prices had also softened ahead of the Lunar New Year holidays, during the last week of January, as end-users avoided holding onto excess stock. Market participants now expect prices to fall further due to the accumulation of inventory during the holidays.

“The overall trading environment is not good, factories are starting up slowly after the holidays, and orders are few,” said a trader.

Market participants are adopting a wait-and-see stance following the implementation of 10% tariffs on Chinese goods into the US by President Donald Trump. In retaliation, China also imposed 15% tariffs on US imports of coal and LNG as well as 10% tariffs on other imports such as crude oil.

No significant impact has been seen on the polyethylene market yet as the tariffs do not affect US plastics or chemical imports, according to sources.

The outlook for the rest of the quarter remains bleak given the excess supply expected to enter the China market with few opportunities for demand to pick up.
mrchub.com

SK Chemicals Co. (Seoul), part of SK Group Ltd., said its fourth-quarter revenue in the company’s green materials business division was 208 billion South Korean won ($143.3 million), 5.2% higher than in the year-earlier quarter, as per Chemweek.

This business recorded an operating profit of 30 billion won, up by 14.4% on year.

In the fourth quarter, the cosmetics sector contributed 32% of total revenue for the green materials business, followed by sheets, films, etc., 42%; and home applications, 26%.

SK’s green materials business produces copolyesters, engineering plastics, petrochemicals, coating and adhesive materials, and electronic chemicals.

The company’s other business is life sciences.

mrchub.com

Fuso Chemical Co. Ltd. (Osaka, Japan) reported a rise of 21.5% year over year in revenue for the fiscal first nine months ended Dec. 31 to Yen52.4 billion ($344.5 million), as per Chemweek.

Operating profit rose by 53.1% year over year to Yen12.5 billion. Net income stood at Yen9.1 billion, up by 50% year over year.

In Fuso’s life science business, sales were up 6.4% year over year to Yen27.5 billion, and operating income declined by 14.5% to Yen4 billion. The company said in the domestic market, demand for food applications remained strong, and demand for industrial applications, pharmaceuticals and daily necessities applications recovered. In overseas markets, demand for malic acid recovered in Europe and Southeast Asia, for organic acids in the US, and demand was also strong in Asia, including China. The income was hurt in part by cost factors, such as rising import and energy prices due to the weak yen and reduced production volume from regular maintenance lasting longer than usual, resulting in increased sales but decreased profits.

Revenue in the company’s electronic materials and functional chemicals business was up 44% year over year to Yen24.9 billion, and operating income also more than doubled to Yen10.2 billion. According to the company, the semiconductor market has completed inventory adjustments, and demand has recovered, mainly for AI. Sales exceeded those of the previous year due to an increase in sales volume of its main product, ultra-high purity colloidal silica, driven by the recovery of the semiconductor market, as well as sales price revisions to address cost increases.

mrchub.com

India’s purified terephthalic acid (PTA) demand rose around 12% in 2024 as buyers diversified supply sources, while strict import policies curbed cheaper mainland Chinese inflows, said Chemweek.

Over January–November 2024, India’s PTA imports totaled around 1.78 million metric tons (MMt), compared with 1.59 MMt in the same period of the previous year, customs data showed, with the majority sourced from Taiwan, Indonesia, Malaysia, Thailand and South Korea.

In 2022 and 2023, Thailand supplied around 21% of India's PTA, but the share grew to around 30% in 2024 as of November, according to the data. Meanwhile, South Korea’s share in India’s PTA purchases rose to around 10% in 2024, from 9% in 2023 and zero in 2022.

Since the implementation of the Bureau of Indian Standards (BIS) norms in 2023, mainland Chinese PTA supplies to India have continued to decline year over year, sources said to Commodity Insights.

A recent change in the BIS policy in 2024 allowed buyers in India to source PTA from non-BIS producers, such as mainland China, on the condition that the finished products must be re-exported within six months. However, despite the policy change, there has been no significant increase in mainland Chinese PTA imports, Indian sources said to Commodity Insights.

In 2022, mainland Chinese PTA accounted for around 57% of India’s total imports, but this share dropped to 44% in 2023 and has more than halved to around 21% by November 2024, customs data showed. India’s import data for December 2024 has yet to be published.

Cheaper shipping rates and a shift to breakbulk shipments for domestic buyers have helped boost supplies from Southeast Asia.

“Over October-November, when freight rates and container unavailability started rising from all origins in Asia to India, freight from Thailand was still on the lower side, comparatively, which supported higher supplies from there,” an India-based PTA buyer said to Commodity Insights.

“Consistent unavailability of containers and vessels over October-November as well as very high container freight rates led to a pile-up of inventory at ports and pushed India-based buyers to opt for breakbulk vessels for shipping,” another India-based PTA buyer said to Commodity Insights.

As India’s PTA import demand shrank, mainland China bore the brunt of the decline, according to sources.

Mainland China’s PTA exports in December fell about 40% month over month to 257,886 metric tons, according to mainland China Customs Statistics.

In addition to India, Turkey’s PTA import demand shrank, further hurting mainland Chinese exports, according to a trader in mainland China. “Statistically, less is being exported to Turkey and India,” the trader said to Commodity Insights.

Market participants in mainland China were shaken by the double blow of weak PTA imports from both Turkey and India.

The start of Turkey’s domestic PTA production is also expected to reduce mainland Chinese exports, prompting producers in mainland China to seek alternative markets, including Latin America, the trader said to Commodity Insights.

“Argentina is normal, [but] other South American countries are less common and in smaller quantities,” the trader said to Commodity Insights, referring to mainland Chinese PTA exports to Latin America in December.

India’s downstream sector buoyant

Demand for polyester from the yarn segment, particularly in India, has been supportive for PTA buyers, according to sources.

“In the last couple of months of the previous year, polyester run rates were stable at around 80%-85%, which is better than 74% heard earlier in the year,” an India-based market source said.

Indian demand for fabrics is no longer concentrated around key festivals, allowing production levels to remain steady throughout the year, according to Indian sources.

Furthermore, market sources said the appeal of polyester exports has diminished due to abundant, cheaper global supplies, which in turn has squeezed margins for Indian producers.

With cheaper mainland Chinese PTA continuing to flow globally, PTA producers in Asia are relying on India’s demand, an Asian producer said.

However, the optimism for Asian producers may be short-lived as India plans to increase its PTA capacities by around 4 MMT-5 MMt over the next few years, according to traders.

”Once India’s new PTA plants are up in the next two to three years, all these exporting countries will be facing a tough time,” a trader in Singapore said to Commodity Insights.
mrchub.com

TPC Group (Houston) has completed the expansion of its crude C4 processing facility in Houston, boosting butadiene capacity by 85,000 metric tons per year, or 20%, to 500,000 metric tons per year, as per Chemweek.

The expansion, completed in the fourth quarter of 2024, was driven by enhancements to its maximum sustained operating rates and hydrotreating capabilities, TPC said.

The increased capacity will compensate for the closure of TPC’s site in Port Neches, Texas, following an explosion in 2019. That facility had a nameplate capacity of around 425,000 mt/year. In the wake of the incident, TPC entered a tolling agreement with BASF-Total Petrochemicals to carry out butadiene extraction in nearby Port Arthur.

In October 2024, TPC announced that it had increased its capacity to produce diisobutylene (DIB) by 27%.

Crude C4 supply has been limited through January thanks to various cracker turnarounds and the arctic blast that brought snow and freezing temperatures to much of Texas on Jan. 21 and 22. Butadiene prices averaged 50 cents/lb, CIF US Gulf, each of the last three weeks, according to Platts assessments by S&P Global Commodity Insights, the highest level since October 2024, and well above the trough of 45 cents/lb recorded from mid-November through December.

Butadiene is used to make synthetic rubbers for a variety of applications, including tires, as well as ABS plastic, which is used to make car interiors and toys, among other products.
mrchub.com