Asia Daily PP and PE Overview 30 November 2017

CHINA

• Calm sentiment across local and import ground
• Falling futures market see no impact on spot trading

Polypropylene (PP)

It is month end and local producers are free from sales pressure. Arbitrage traders are not active in the spot sector as soon as expected which allow local prices to climb another CNY50-100/ton ($8-15/ton). This is an interesting development considering the dynamic correspondent relationship between spot and futures markets. “It is very likely that domestic suppliers would keep new offers for December at stable to firmer levels. Supply and costs factors are the strong acting factors now,” a trader said. At the meantime, real transaction is very limited as discussed in the previous session that buyers have made sufficient purchases for the near term need.

Import market is steady in the range $1110-1150/ton CFR China, LC 0-90 days term. Despite the overall range has softened $10-20/ton from last week, players believed that in the medium term, PP market might face less pressure compared to PE due to lesser new plant start up.       

Polyethylene (PE)

More USA PE cargoes are emerging toward the end of the week though HDPE prices remains relatively firm. The concern is becoming real, sources said, as buyers are withdrawing to the sideline in expectation of seeing additional price cuts in the near term. Prompt USA LLDPE film cargoes, December shipment from Singapore are offered at $1125-1130/ton, TT in advance term. “The need to reduce inventories among USA suppliers ahead of the long Christmas and New Year holidays is still there. For us, we started taking more passive stance of wait and see while keeping minimal on hand stock,” a trader said.

Better number of deals are observed in domestic spot market at CNY50/ton ($8/ton) higher for HDPE cargoes. Buyers are selective in term of prices, yet willing to buy at the lower end of the overall range. “Agricultural film sector would need to make additional replenishment amid low inventory levels. Market is still having sufficient support, and therefore, we are confident in near term outlook,” a market source inform.

SOUTHEAST ASIA

• Sentiment remains steady
• Market completing December shipment business for PE

Polypropylene (PP)

There have not been any major changes in the regional market with demand in Vietnam and Indonesia remains subdued. However, regional suppliers are looking at Philippines as an temporary export outlet as limited local supply continue to encourage buyers here to seek prompt shipment from ASEAN makers. There were some issues at the main port, which bottleneck the flow of material to the market, yet players emphasizes on the unavailable of cargoes from domestic producers. “We managed to divert 1000 tons of Vietnamese homo-PP to Philippines at $1200/ton CIF. Indonesia market is too weak,” a regional supplier said.

True enough that demand in Indonesia is currently trail behind other neighboring countries, including Vietnam for the fact that a number of deals for Middle Eastern homo-PP have been concluded at $1160/ton CIF Vietnam, yet strong resistance in Indonesia. Ending of the tax scheme BMDTP play a big role in the slack demand condition besides the weak end product businesses.

Polyethylene (PE)

More Middle Eastern supplier finalized December shipment prices to the region with only $10/ton reduction on LLDPE film and $20/ton on HDPE film, at $1160-1180/ton and $1280/ton respectively. There are no respond from Indonesia market on HDPE film cargoes. “Raw material costs are too high compared to our end products. We sourced some quantity from local market and decided to skip importing this month,” a converter commented.

Metallocene PE (mPE) offers from major Southeast Asian producers to the region are steady compared to earlier this month at $1340/ton for Singaporean origin and $1360/ton for Thailand origin, CIF Indonesia, LC AS term. Deals for Thailand cargoes however, witness a drop of $25/ton from initial offers, “We proceed with purchases, first due to low stock level, and secondly, these prices are relatively competitive,” a converter said.