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CHINA

• Concern over the availability of USA cargoes revived as two countries agreed to truce trade war
• Chinese players continue putting substantial confidence in PP market 

Polypropylene (PP)

Thanks to strong purchasing activities in the previous trading day, total PP and PE inventories at Sinopec and CNPC warehouses fell 35,000 tons to approximate 755,000 tons as of 22 May 2018. Speculators are putting a substantial confidence level on the PP market, causing the price gap between PP and LLDPE futures on Dalian Commodity Exchange to reach record low of only CNY32/ton ($5/ton).

In the meantime, converters in the PP sector are rather calm about making replenishment amid traditional off-peak season. “We are maintaining spot prices unchanged, however open to negotiation with serious buyers. Our customers are not active and most only procure small quantity,” a trader said.

Polyethylene (PE)

There have been reports that import arrival for LLDPE film to China is getting very dense, which could outweigh the demand in this traditional slow season. In contrast, HDPE supply remains tight though buyers are becoming more reluctant toward the cargoes priced above the $1400/ton threshold.

In another development, the Chinese government in a campaign “Blue Sky 2018” crackdown a number of plastic waste smugglers while tightening inspection at main ports in Southern China for near-prime and off-grade cargoes. “Lower quality off-grade cargoes are facing extremely stringent inspection at the port for waste contents. We are monitoring further development of this campaign while expecting some impact on the demand for near-prime and off-grade cargoes,” a market source added.      

SOUTHEAST ASIA 

• Limited import homo-PP as suppliers plan fresh offers 
• Regional PE market remains calm after new price announcements 

Polypropylene (PP)

There are very limited new offers for import homo-PP to the region and players are still patiently waiting for more overseas suppliers to open fresh prices. “We have diverted homo-PP cargoes to other markets as demand in Indonesia has been sluggish for too long. At the moment, we place more attention on PP block copolymer and HDPE grade,” a Thailand producer informed. 

In Vietnam, non-dutiable homo-PP cargoes originated from Thailand and China remain in the range $1315-1330/ton CIF Vietnam, LC AS term while dutiable cargoes are scarce. “It becomes difficult to gauge the near-term outlook as the price gap between dutiable and duty-free cargoes is getting narrower,” a Vietnamese buyer said.

Polyethylene (PE)

There are very limited transactions for import PE cargoes across the region though a couple of major regional and international producers has announced June shipment offers in the previous trading day. Converters in Indonesia, who reported strong Ramadan sales results for end products, are now slowing down on replenishment activities due to comfortable inventories on hand. “We are covered until the end of July. We plan to lift end product prices and watch out for changes in orders before purchase additional quantity of raw material,” a flexible packaging and bags said.

Vietnamese buyers are exposing to a risk of lacking HDPE supply in the medium term as overseas suppliers continue putting more attention to China for better bottom-lines. “Many buyers have been putting purchases on hold for some time due to high prices and the number of HDPE cargoes arrival in the coming month might be minimal. Therefore, local traders are not rushing to sell on-hand quantity with a strong expectation that domestic market would advance in the near term,” a market source said.