Increasingly more buyers appear to have taken a wait and see stance this week due to several reasons including volatile crude oil prices, poor end product markets, political tensions and, most importantly, the absence of the Chinese market, as per the pricing service of ChemOrbis. Crude oil futures on NYMEX posted a daily loss of more than $3/bbl on Wednesday and moved below the $90/bbl threshold again after recovering from the two month low settlement posted last week.
After having settled at $88.14/bbl by the middle of this week, futures gained back almost all of Wednesday’s loss and settled above $91/bbl on Thursday again owing to the growing tension between Turkey and Syria and the appreciating euro against the dollar.
Earlier in the week, a source from a West European producer told ChemOrbis, “We are offering PE for October at a rollover from last month to Italy. However, we are not so sure if we will be able to achieve stable prices. We may try to stick to our rollover requests as naphtha costs jumped back up even though monthly ethylene contracts have posted small decreases.”
European buyers, on the other hand, prefer to wait as long as they can for now since they believe that further decreases will be provided as the month wears on. As many industries are still suffering from the impacts of the ongoing economic crisis, converters are facing poor end product orders for numerous end product applications, which is also affirmed by the news that the Eurozone’s manufacturing activity contracted for the 14th month in a row in September, albeit at a slower pace.
“I am planning to follow a wait and see policy for the near term,” commented a Turkish PVC buyer, as well. Pointing to the widespread collection problems and the approaching winter season, the buyer doesn’t feel financially strong enough to risk securing cargoes from the import market with long deliveries. The growing political tension with Syria is also causing Turkish players to be cautious over the near term after a mortar bomb fired from Syria landed in a residential district of a southeastern Turkish town on Wednesday. Upon this development, Turkey’s Parliament on Thursday approved an abrupt motion that will allow the government to undertake necessary military retaliation against Syria.
The wait and see mood was also prevalent in Southeast Asia’s PE market this week. Volatile crude oil and the holiday in China pushed buyers to the sidelines, as per ChemOrbis. This in turn dampened demand in the region, causing further hesitation amongst players.
Indeed, the absence of the Chinese players is playing a major role in the waiting stance of players in global markets. The Chinese market has been closed for a week long National Day Holiday since Monday. Almost all players are now wondering how the Chinese market will unfold right after the holiday.