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CHINA

• Domestic PE market continue to see discounts
• Purchasing interest seems limited

Polypropylene (PP)

Total inventories at major domestic producers’ warehouses decreased only 15,000 tons from the previous trading day to 660,000 tons as of 12 December 2017. Converters in the BOPP sheet sectors are complaining about the thin profit margin of approximate CNY100/ton ($15/ton) due to high raw material costs and fierce competition. “Therefore, we only replenish based on need basis. This situation has been in place for over a year and might persist in the coming months. At the meantime, end product orders are not strong,” a buyer said.

Buyers in Southern China area meanwhile, are facing limited supply condition for homo-PP injection grade. Offers for this cargo are up CNY50-100/ton ($8-15/ton), yet it is difficult to source quantity. It has been reporting that sales for plastic injection machineries are up by 50% compared to last year in China, which indicates rapid growth in this sector.

Polyethylene (PE)

Traders continue to offer small discount of CNY50/ton ($8/ton) on all PE cargoes in local ground, including HDPE. Supply is gradually improving with approximate 12,000 tons of Iranian HDPE film 7000F arriving China main port in January, sources said; yet, there is no indication of a possible drastic drop in the immediate term. Both Mehr and Ilam Petrochemical has achieved normal production rate, however, the suppliers might need sometime to clear the backlogs.

SOUTHEAST ASIA

• PP market sparks an upswing
• Buying activities remain lax

Polypropylene (PP)

Regional PP market remains firm with more regional producers implement small hike of $10-20/ton on the available quantity despite weaker than expected demand condition. Thailand homo-PP yarn is offered at $1200/ton CIF Vietnam, LC AS term and deals are seen at only $10/ton discount. Distributors for this origin report to have diverted a considerable quantity to Philippines in recent weeks, where tight local supply encouraged buyers to source from import ground. Only buyers with extreme low inventories on hand agreed to the hike. “We have stocked up sufficient inventories for January and at the moment, continue to monitor further development. The upswing is really unexpected, yet we still think room for further hike is really limited,” a buyer said.

Within Indonesia, distribution market is catching up with the trend set by a major domestic producer, inching $10/ton higher week on week with cash term offers reach $1230/ton FD Indonesia basis. Buyers are reporting difficulties in obtaining discount on deals given the firm stance among suppliers. “Real transaction become limited,” a trader commented. Players are hoping that market condition would improve towards beginning of 2018.  

Polyethylene (PE)

The regional PE market is calmer with very limited new offers available. It appears that Indonesian buyers are returning to local market for PE cargoes instead of sourcing from import ground in recent weeks. This situation might be temporary, as buyers have finished up the annual BMDTP allocation. “Import market might be better after the BMDTP renewal,” an international trader said. At the meantime, PT. Lotte Chemical Titan started cutting LLDPE supply to the spot market due the brief shutdown reported earlier. This could affect the LLDPE availability in both Indonesia and Malaysia market in the near term.