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CHINA

• Local sentiment improved on better transaction among trader
• As trade war clouded export market, local converter hope for Singly Day demand 

Polypropylene (PP)

Domestic sellers reported better sentiment in the local ground given the fact that arbitrage traders are actively offering discounts to spot buyers, as futures remain weak. “We replenish some cargoes to balance up the higher costs stock. Converters are more conservative when it comes to fresh buy amid the traditional low season,” a local trader said, adding that sales for PP are better than PE at the moment.

Total inventories at Sinopec and CNPC’s warehouses fell 20,000 tons from the previous trading day to approximate 775,000 tons as of 21 June 2018. 

Polyethylene (PE)

Import HDPE film to China once again has mostly retreated to below the $1400/ton threshold on persistently weak demand condition. Mainstream HDPE film cargoes from Middle East and Taiwan are ranging $1370-1380/ton CFR China, LC AS term and Iranian HDPE film (7000F) grade, which was traded above the threshold in the previous week has now reduced to $1390/ton with the same term. Players have strong concern over the depreciation of the Chinese Yuan against the US dollars, which might discourage buying interest for import materials.    

SOUTHEAST ASIA 

• Import PP and PE announced at softer levels 
• Limited trading activities as buyers expect further reduction 

Polypropylene (PP)

Fresh import offers from major Saudi Arabia producers remain on the stable to softer trend at the start of the trading day, however, deals are achieved at $10-15/ton reduction by the end of the session. The development clearly underlines the softening trend that regional buyers have been hoping for. “We only procured a small quantity of yarn while waiting for further reduction to emerge. We think the downtrend has only just started,” a local trader informed.

Converters are more cautious, as reported earlier that many have comfortable stock on hand. “We hope to achieve a little more discount before making fresh replenishment. We have comfortable stock on hand now and therefore, have time to wait,” a converter said.

Polyethylene (PE)

A Saudi Arabia producer pioneers the downtrend by slashing July shipment offers to Southeast Asia by $30/ton for both HDPE and LLDPE film. “We are surprised about the early price announcement this time. Demand is not strong across the region and that explains to the strong willingness to negotiate from the suppliers,” a regional buyer said.  

Meanwhile, buyers plan to wait for more offers to emerge before entering deals given the strong belief that the softening trend has just only started. “Third quarter of the year is traditionally the off-peak season and with the upgraded trade tension between China and the USA, we do expect weaker demand in July. The downward pressure is real and we hope to achieve better negotiation with the supplier,” a buyer added.