South Asia PE market weighs tariff-led crude slump with potential tight supply

The South Asia polyethylene (PE) market was abuzz with concerns over falling crude oil prices on April 7, with some participants expecting a drop in PE prices in the coming days, while others saw balanced fundamentals due to plant shutdowns in India, as per Chemweek.

Crude oil futures slumped over 3% day over day in Asia trade on April 7 following China’s announcement of an additional 34% tariff on all US imports, effective April 10. “Even naphtha prices are falling with crude oil, and we are expecting more US cargoes arriving in Southeast Asia soon,” a major international supplier said to Platts, part of S&P Global Commodity Insights.

“The buyers may take a wait-and-watch stance in Southeast Asia, while the PE purchasers in China may order on a need-to basis,” said the polymer producer. The Platts-assessed C+F Japan naphtha marker declined by $57 per metric ton on April 4 to $526.25 per metric ton on April 7.

“In the coming days, PE rates are likely to go down both in India and Pakistan due to falling crude prices,” a Pakistan-based trader said. PE trade participants in India shared mixed views on the tariff development.

At least two major Indian producers forecast a potential drop in PE prices in early May while denying the possibility of an immediate impact on the domestic market. “The falling crude prices could impact our polymer markets in May. However, with not much change in offer levels, the market could remain steady until April end.”

Another domestic PE supplier shared similar views, saying the drop in crude prices leading to softer PE markets in India is a “high probability.” In contrast, a local PE maker said, “A significant impact of falling crude prices on India PE market seems unlikely to me as there are few shutdowns here that will cause supply shortage and a price uptrend.”

The PE unit at Gail’s petrochemicals complex at Pata, Uttar Pradesh state, has been put under a partial shutdown plan for routine works. The complex has two high-density polyethylene (HDPE) units with a combined annual capacity of 200,000 metric tons and two LLDPE/HDPE swing plants with a combined capacity of 610,000 metric tons per year.

A couple of other PE units are also expected to shut in the country. India’s Haldia Petrochemicals is set to shut its polymer plant in the Purba Medinipur, West Bengal state from mid-April.

“PE prices in Asia will move up as the local companies have low inventory levels due to higher sales in 2024–25,” a Mumbai-based trader said. Another trader supplying to the western regions of India said, “Though the crude market is volatile, there is no international offer in the market right now, so we’ll have to wait for a clearer picture.”

“It takes three to four weeks for crude prices to impact polyethylene markets. Also, all new offers will come around end-April. The PE prices in India for the next few weeks should remain stable,” a PE trader source said.

Platts assessed South Asian general-purpose, low-density grade polyethylene stable from the last assessment at $1,200 per metric ton CFR South Asia on April 7, considering tradable indications heard at the same level and amid fewer import offers. The same source noted that naphtha prices are down, while propylene rates have been stable.

The propylene CFR China and FOB Korea markers were stable day over day at $825 per metric ton and $790 per metric ton, respectively, at the intraday levels on April 7, with participants awaiting a clearer direction.

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President Donald Trump threatened Monday morning to add an additional 50% to tariffs on Chinese goods if China does not withdraw the 34% tariffs on all US imports it announced on Friday, as per Chemweek.

Trump’s Truth Social post is the latest escalation in an ongoing trade war that has roiled markets for three straight trading days. On April 2nd, Trump announced plans to impose 10% tariffs on all imports on top of “reciprocal” tariffs varying by country. The 24% reciprocal tariff announced for China, on top of a 20% tariff implemented in February, brings the total tariff on China’s imports to 54%, effective April 9.

In a Monday morning post on Truth Social, Trump railed against China’s “Non-Monetary Tariffs, Illegal Subsidization of companies, and massive long-term Currency Manipulation,” and said reiterated that “any country that Retaliates against the U.S. by issuing additional Tariffs, above and beyond their already existing long term Tariff abuse of our Nation, will be immediately met with new and substantially higher Tariffs, over and above those initially set,” Trump write “Therefore, if China does not withdraw its 34% increase… by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th.” Trump also said “all talks with China concerning their requested meetings with us will be terminated!”

If implemented, tariffs on Chinese imports into the US would reach 104% on April 9. China’s 34% retaliatory tariffs on US imports is set to take effect on April 10.

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Orlen Unipetrol SA said it will begin a planned maintenance turnaround at its petrochemical facilities in Litvinov, Czechia, on April 11, with the program to run through May, as per Chemweek.

The company said on April 4 it will invest 3 billion koruna ($131 million) in the turnaround. During the two-month operational shutdown, the operator will undertake regular maintenance and modernization of technologies, along with the implementation of investment projects, it said.

The steam cracker and downstream derivatives plant is expected to return to operation at the beginning of June. The refining part of the complex, including the facility at Kralupy nad Vltavou, which produces fuels and agrochemical products, will remain in full operation throughout.

Orlen Unipetrol, a subsidiary of Orlen SA (Plock, Poland), carries out full maintenance of its petchems site every other year, with its refining facilities undergoing works in the interceding years.

Over the course of the turnaround, the site’s ethylene, polyethylene and polypropylene production units will undergo more than 2,000 maintenance and modernization operations, according to the company. Key actions include replacing the high-pressure steam pipeline, replacing the inner floors of the four columns of the ethylene unit and modernizing the flare system, it said.

Unipetrol recently restarted its cracker at Litvinov after concluding a minor unplanned outage.

The naphtha cracker has the capacity to produce 585,000 metric tons per year of ethylene and 300,000 metric tons per year of propylene, according to data from Platts, part of S&P Global Commodity Insights.

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Prices of Asian para-xylene (p-xylene) crashed to the lowest level so far in 2025, with an even steeper drop expected in the days ahead as the recent announcement of trade tariffs by the US negatively impacted demand for downstream purified terephthalic acid (PTA) and polyester markets, according to sources, as per Chemweek.

The announcement of new US tariffs roiled commodity markets, with more impact expected in the days ahead, traders said to Platts, part of S&P Global Commodity Insights.

At the Asia close April 4, assessed Asian p-xylene down $36 per metric ton day over day at $803 per metric ton CFR Taiwan/mainland China, the lowest in 2025 so far. Prices collapsed even more in early trade April 7, dropping $41 per metric ton to $762 per metric ton.

”It’s all about tariffs. The market seems [to be in a] panic,” a trader in mainland China said to Platts. The rout was visible when upstream crude prices moved below the $70 per barrel mark and continued to slide even further, the trader said.

Traders and producers in Asia were concerned the impact of tariffs would be felt on downstream PTA and polyester markets. “I believe this will significantly suppress the demand for polyester. The impact [of tariffs] is serious, even the possibility of [an] economic crisis [cannot be ruled out],” a second mainland Chinese trader said.

Downstream polyester demand, especially in the domestic markets, has been struggling for months, according to sources. Domestic consumption has remained weak over the past several months as consumers turn increasingly wary of spending on the back of a bleak economic outlook.

To combat the pressure of weak demand, p­xylene, PTA and polyester producers have tried to fight back by curbing supplies through run cuts and turnarounds. P-xylene and PTA plant operation rates have been moving lower, reflecting the curb in production, a broker in mainland China said.

“We are on turnaround soon,” a p-xylene producer in Southeast Asia said, referring to short-term plans to deal with the tariff news. In the week to April 3, p-xylene plant operation rates in mainland China were at 74.4%, compared to 78.2% the previous week, while PTA plant operation rates dropped to 79.2% from 79.9%.

But after the tariff announcement, supply side measures aiming to offer support to spot prices have been largely blunted, traders said. “PTA [futures] is down, everything is limit stopped right now. All sells, no buys [so] can’t drop any further for now,” a trader in Singapore said, referring to futures prices at their lowest level.

Recent supply cuts in mainland China and South Korea were of little help, as the tariff announcement has significantly impacted the market, a third mainland Chinese trader said. The Asian chemical markets may be gearing up for a potential churn in trade flows as well, the trader further noted.

”South Korean aromatics [producers] want to export to [mainland] China, can’t go to the US. [Mainland] China’s direct polyester and textile exports, as well as transit channels, may be closed,” the trader said.

Market participants remain on the edge as the tariff tensions pan out, with hopes running high of a pullback in some of the harsher levies, which in turn could help cool tensions across Asia, sources said.

Asian blendstocks prices fell April 4 with tumbling upstream prices in reaction to the steep new US tariffs on several Asian markets. Platts assessed the methyl tert-butyl ether (MTBE) FOB Singapore marker down $44.16 per metric ton day over day at $679.60 per metric ton, hitting its lowest point since Aug. 23, 2021.

However, the tariff-related impact on MTBE may be more muted than other blendstocks as the US does not utilize MTBE in blending domestically. Some mainland Chinese exporters are eying opportunities to sell more MTBE to South American buyers if the importing markets impose reciprocal tariffs on US MTBE exports, sources said in the week ended April 6.

In the case of isomer mixed xylenes, it does seem likely that Asian exports may avoid the latest round of reciprocal tariffs as mixed xylenes under HS code 270730 is exempted under Annex 2 of the executive order published by the White House on April 3, where South Korea was slapped with a 26% tariff.

The Platts FOB Korea mixed xylenes marker fell $19 per metric ton to $709 per metric ton on April 4.

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Japan’s export of plastic waste rose by 6.6% from a month earlier to 43,846 metric tons in February after the New Year holiday season in January, customs data showed.

Japan's plastic waste exports to Malaysia stood at 12,489 metric tons in February, almost six times more compared with 2,345 metric tons a month earlier, the data showed. Japan's exports to Vietnam jumped by 62% to 11,393 metric tons during the same period, the data showed.

Japan exports large volumes of plastic waste to Southeast Asia. According to the customs data, Japan's plastics waste exports to Southeast Asia stood at 465,862 metric tons, or 68% of the total volume in 2024. Among Southeast Asia, the first export partner for Japan is Malaysia, exporting 229,221 metric tons in 2024.

Japan is the second-largest plastics waste exporter globally, followed by the US, according to market sources. Since 2017, Japan has been shifting its exports from China to other regions — such as Southeast Asia — after China decided to ban plastic waste imports. Japan’s plastics waste exports to China stood at 7,263 metric tons in 2024 compared with 249,267 metric tons in 2017, Japanese customs data showed.

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