POE prices decline in the US, Stability Maintained in Asia amid destocking and lower demand

In the second half of May, the price of Polyolefin Elastomer (POE) in the US market saw a decrease, while it remained stable in the Asian market. This price fluctuation of POE in both regions reflects a declining trend over the past few months, driven by continuous destocking by suppliers. Interestingly, the price of the major feedstock, Ethylene, has increased in the US market. Despite this, the downstream Automobile and Construction sectors are experiencing positive demand, supporting overall POE consumption in the US but destocking persist its price downturn. Conversely, in Asia, the underperformance of the Chinese market, the region's biggest player, has hampered the demand for POE, contributing to its price stability in the downward price trend.

In the US market, the price of POE experienced a notable decline this week, primarily due to ongoing destocking activities among suppliers, which led to a continued decrease in prices. In contrast, the price of the major feedstock, Ethylene, has seen a 17.95% increase since January. According to a manufacturer update from LyondellBasell Industries, the company reported a net income of USD 473 million for the first quarter of 2024. In North America, lower costs for natural gas-based feedstocks and energy benefited margins for olefins and polyolefins, despite constrained volumes due to downtime in various production units. Additionally, logistics disruptions in Europe restricted competitive imports, resulting in increased volumes from local assets. Current market sentiments indicate that suppliers are cautious about inventory accumulation, contributing to the downward price trend. This week, the price of octene-based POE concluded at 2890 USD/MT FOB-New Orleans, marking a 0.7% decrease.

In the Asian market, particularly in Singapore, the price of POE remained stable this week. In the feedstock market, the price of Ethylene has seen a continuous decline of 11.35% since March 2024. Mitsui Chemicals Asia Pacific Ltd reported a notable increase in sales revenue, reaching 544.0 billion Yen and contributing 31% to total sales. In the elastomers segment, sales increased due to improved trade terms, driven by sales price revisions and favorable foreign exchange conditions. However, POE sales decreased due to slowing demand, reflected in low naphtha cracker operating rates. Suppliers have managed inventories effectively, with no significant change in the demand-supply ratio, leading to price stability. Consequently, the price of POE in the Singapore market remained unchanged at 3060 USD/MT FOB-Jurong.

According to ChemAnalyst, the price of POE in the global market is expected to exhibit a stable to bearish trend in the upcoming sessions. This expectation in the POE price fluctuations is primarily based on the underperformance in the downstream market of China's major economy. Additionally, continuous destocking of inventories is anticipated to persist, further influencing the POE price trend. These factors, combined, will likely lead to stable to declining POE prices in the near future, reflecting the broader market conditions and economic activities.