Asia Daily PP and PE Overview 5 December 2017

CHINA

• Local PP and PE inventories at major producers’ warehouses drop 20,000 tons
• HDPE blow molding gaining momentum on tightening supply

Polypropylene (PP)

Despite the fact that total PP and PE inventories at major local producers’ warehouses fell 20,000 tons from Monday, to 620,000 ton as of 5 December 2017, the rate of inventories digestion is a little slower. This is in line with the previous report that Chinese buyers are becoming conservative in procuring fresh cargoes. “Purchasing activities are even slower today. Buyers are waiting for the next cyclical downtrend to make replenishment,” a trader said.

In the import ground, a Saudi Arabia producer opens import homo-PP offers at $1160/ton CFR China, LC 90 days and buyers placed bids at $30/ton lower are getting rejected. Such firm stance is new in a market that has been stagnant for several weeks. “Unfortunately, there are no deals at the new levels, indicating the lack of solid support even if futures trading are strong,” a market source said.

Polyethylene (PE)

LDPE film remains the weakest performing grade at the moment in term of prices as comfortable supply weight down on the sentiment. Two major international producers stepped further back on the latest LDPE film offers from last week by $10-20/ton, bring price list to $1210/ton for Qatar origin and $1215/ton for Thailand origin, all based on CFR China, LC 0-60 days term. Buyers continue to press for prices below the $1200/ton threshold.

HDPE blow molding appears to be tight, both in import and local ground. Sources are informing that with the switch in production to higher value product such as HDPE pipe, local production for blow molding grade drop by 60% year on year, which pushes prices higher. A Saudi producer reportedly sold HDPE blow molding at $1240/ton CFR China, LC 90 days without much hassle. While room for further price hike is still available, market participants are not seeing anything similar to HDPE film case, firstly due to the smaller consumption and secondly, many can and bottle applications can be replaced with alternatives such as PET.      

SOUTHEAST ASIA

• Sentiment remains calm
• Local PE market in Indonesia continue to firm up

Polypropylene (PP)

There has not many deals reported in the regional PP market as the week proceeds. Buying interest for import homo-PP in Indonesia is so weak that several international traders decided to divert cargoes to nearby markets, where sentiment is better. “Indonesian buyers seems concluding the year already. Trading activities here might not witness any uptick in the near term. We have diverted all Saudi homo-PP cargoes to Vietnam at $1160/ton CIF, LC AS term.”

Deals for import Saudi PP yarn at $1160/ton in Vietnam are rather sparse. Other suppliers are not giving up any ground when it comes to negotiation pinpointing to the lack of inventories pressure. From another aspect, thanks to firm import ground, domestic traders in this market managed to implement small increment on locally held homo-PP offers. “Sales are not smooth just yet. Import prices are firming up and we expect to see similar trend in local ground,” a trader said.

Polyethylene (PE)

Similar to the PP sector, there has not been any major movement in the regional import PE market, too. A number of overseas distributors reported to have sold out Saudi Arabia PE cargoes and currently on the wait and see position. “There might be some extra quantity available this week, we are waiting for further signal from principal suppliers,” a distributor said.

In Indonesia, local PE prices continue to recover, including LLDPE film, which has been continuously softening since beginning of September 2017. Players believed that such recovery in market prices is mainly pulled by surging HDPE film since mid October. Compared to last week, the average local LLDPE film based on FD Indonesia, cash equivalent has gained approximate $25/ton, according to CommoPlast data. There is not large space for further hike in the near term as converters are unable to transfer higher production costs to end product prices, leading many to cut production rate.