Asia Daily PP and PE Overview 29 November 2017

CHINA

• Buying interest chills after active replenishment
• More USA PE cargoes show up in import ground

Polyethylene (PE)

Spot PE market remains steady, defying the big slump in futures trading over the past two sessions. Suppliers are free from inventories pressure with total polyolefins inventories at major domestic producers’ warehouses drop 10,000 tons to 610,000 as of 29 November. It is understood that buyers have replenished comfortable stock for the near term need, and might become a little unwinding for the remaining of the week.

In the import sector, more USA cargoes are flowing in to China, concerntrated heavily on HDPE grades. A trader informed of having approximate 3000 tons of prime HDPE film grade and 2000-3000 tons of HDPE blow molding that are available for spot buyers. “We are also having LLDPE film and HDPE injection grades. All of these cargoes are for December shipment. More quantity shall be coming by first quarter next year,” the source informed. Players are feeling uneasy with the update on USA cargoes, posting heavy concern about market prospect in the post Lunar New Year term.

Polypropylene (PP)

Traders are offering up to CNY100/ton ($15/ton) discount in order to bring buyers back to the market after facing a sudden chill in purchasing activities. However, there is no real sales pressure emerged. There is a possibility that if futures trading is not recovering soon enough, arbitrage traders might redirect cargoes to spot ground to gain the price gap, which migh cause serious damage to the sentiment.

Homo-PP injection has been tight throughout this month, yet buyers are very reluctance to accept higher import offers. Indian and Saudi homo-PP inject offers reportedly softened by $10/ton compared to the beginning of the week to $1140-1150/ton today with very limited real transaction.

SOUTHEAST ASIA

• Middle Eastern producers finalized December shipment prices
• Buyers watch out for medium term outlook before procuring deep-seas cargoes

Polypropylene (PP)

There has not been any drastic movement in the regional PP market though it becomes clear that prices below the $1150/ton threshold for regular origins are becoming scarce. Several deals for Thailand homo-PP yarn are observed in Vietnam at $1170/ton CIF, LC AS term, a $10/ton reduction from initial price list. At the meantime, more Saudi homo-PP cargoes emerged at the level $1170/ton to Vietnam, which are subjected to 3 per cent import duties. It becomes natural that buyers are turning to Thailand material as a better choice, leaving demand for dutiable cargoes very limited room to surge.

Indonesian buyers are facing tough situation as Middle Eastern homo-PP suppliers refused to conclude deal below $1170/ton CIF, LC AS term. Primary support comes from satisfactory demand in Indian Subcontinent and China market. “As a result, we decided to skip purchases this time. End product business is very slow, which might anchor the advancement of PP market,” a woven bag converter said.

Polyethylene (PE)

Middle Eastern producers announced December shipment offers in the previous sessions are now deciding on the final prices. One has already agreed to cut LLDPE film offers by $10-20/ton from price list while insisting on HDPE film cargoes. Only regular customers proceed with basic buy while others are concerning that PE market would become weak after Lunar New Year, given the increasingly available of USA materials. “At the meantime, our principal supplier is still finalizing prices. Buyers submitted bids at $20/ton below offered levels,” an international trader said.

Within local market in Malaysia, both major producers here announced new offers with large reduction for LDPE cargoes while keeping HDPE and LLDPE relatively firm due to lack of supply for these grades. And yet, buyers are showing no eager to scout for cargoes pinpointing the need to keep low stocks during the year-end financial closing. However, suppliers here appear to be free from inventories pressure as there are still backlogs reported among buyers.