Asia Daily PP and PE Overview 7 December 2017

CHINA

• Falling futures market triggered expectation for discount
• Local HDPE film fall second consecutive day

Polypropylene (PP)

Futures trading unexpectedly make a downturn, shaking sport ground sentiment. Traders are now agreeing to as much as CNY200/ton ($30/ton) discount on homo-PP yarn grade for serious buyers after bumping into tremendous pressure. Total inventories at major domestic producers’ warehoused piled up 20,000 tons from the previous day to 620,000 tons, reflecting the weak purchasing activities.

There has not been any major movement in the import market, however, downward pressure might become real if local market continue to fall in the next several session. “We temporarily turn to local spot market for immediate cargoes as prices are more competitive. Overseas sellers might need to follow suite the local trend in the near term,” a buyer said.

Polyethylene (PE)

It becomes clearer in domestic ground that the HDPE film market is loosing momentum due to gradual improving supply condition. Local offers for this grade has been falling two sessions in a row, with accumulating loses of CNY200/ton ($30/ton) from earlier this week. “Market is entering a self-adjustment period. Therefore, we are not planning to make any large buy at the moment,” a buy said. In the import market, Malaysian HDPE film concluded at $1300/ton for LC AS term and $1315/ton for LC 90 days term, all based on CFR China term.

A number of Chinese traders are planning to purchase import LDPE film if prices slip to below $1200/ton mark. “It seems that market is nearing the bottom and we are on the watch out mode now,” a trader informed.

SOUTHEAST ASIA

• Limited trading activities observed
• Doubt on sustainability of firming PP market become prominence

Polypropylene (PP)

The regional PP market remains relatively stable to firm after the special deals for Saudi Arabia homo-PP cargoes reported in the previous session. A regional producer lifts homo-PP yarn offers by $15/ton week on week, reaching $1200/ton CIF Indonesia, LC AS term today. “We are in no rush to make replenishment, hence we might take a little longer to evaluate the possible market direction in the coming month before taking position,” an Indonesian buyer said.

Regional buyers are increasingly loosing confidence in the sustainability of the current firming trend in PP market citing that the supply tightness that once pushes market higher is now well balanced by the weak demand condition. Traders, who previously directed cargoes from Indonesia to Vietnam with hope to obtain better sales results, are not seemingly satisfied with the purchasing activities here either.    

Polyethylene (PE)

After news that a fire hit Braskem’s complex in Triunfo, Brazil, that cause a shutdown at its 375,000/ton LDPE line; Southeast Asian buyers are paying close attention to the next update from the company to gauge the likely impact the event has on the market. Many are expecting prices for LDPE film are nearing the bottom with a source said, “Braskem materials are not very regular in Southeast Asia, however, there could be a possible indirect effect. We hope to obtain additional $20-30/ton discount from our suppliers to make larger purchases,” a Vietnamese buyer said.

As China is loosing appetite for HDPE film, international traders active in Southeast Asia are also facing difficulties in attracting deals at high levels. A trader offer Saudi HDPE film at $1300/ton, CIF Vietnam said, “Even regular customers are very reluctant to make purchases. The costs are too high and we are unable to offer any discount at the moment.”

At the meantime, a number of converters in Vietnam are searching for a reliable HDPE film source of supply after Saudi’s Sabic decided to focus on higher value products, causing a large drop in monthly allocation to these buyers. “We are testing Thailand HDPE film and if the quality matches requirement, we might proceed with a regular buy of 500 tons per month,” a HDPE bag maker said.