Asia Daily PP and PE Overview 11 December 2017

CHINA

• Sentiment remains calm
• HDPE market loses steam

Polypropylene (PP)

There have not been any major changes in the PP market. Despite stronger sentiment on the futures market, real trading activities in spot ground remains soft. According to market sources, supply for natural gas in Northern China is facing serious shortage since the government initiates the clean energy program that aims to reduce the use of coal in generating heat during the wintertime. Such issues might lead to a temporary eased in coal consumption regulation from the energy sector, which might boost coal demand. Players are speculating that coal based polyolefin sector therefore, might enjoy a spillover effect. Local spot offers for homo-PP increased CNY50-150/ton ($8-23/ton) from last week.

Not many international suppliers announce new offers on the firs trading day of the week with mainstream market remains in the range $1130-1150/ton CFR China term. Firmer energy complex towards the end of the year and tightened supply have caused a structural change in the PP sector, which might drag the current firm trend into first quarter of 2018, market participants said. A source commented, “For weeks, we have not seen anything below the $1130/ton mark. Import ground is now very lack of dynamics.”  

Polyethylene (PE)

Domestic suppliers continue giving out discounts of CNY50/ton ($8/ton) for all PE grades, including HDPE in the face of weak purchasing activities. Buyers, especially traders, become very cautious about keeping high HDPE stock, pointing to a big price risk amid easing supply condition. A source added, “Supply is still relatively limited, yet the risk is real as market has reached the cyclical peak. We are not even interested in replenishing HDPE yarn and blow moulding cargoes at the moment.”

Sources reported that ExxonMobil has achieved on-spec cargoes at its newly started up PE complex in Texas, USA and offers for prime grade metallocene PE (mPE) based on trader’s packaging appears in China at $1095/ton, CFR China, LC 90 days term for January shipment. “We only have 500 tons and hoping to attract some interest since prices are very competitive. More quantity shall come in the later month,” a trader informed.

SOUTHEAST ASIA

• Steady sentiment with limited transaction
• Inquiries for HDPE blow molding seems improved

Polypropylene (PP)

There are few number of new offers observed on the first trading day of the week though suppliers seems to be lacking of sales pressure, which encourage the firm stance on the cargoes. Very limited discounts are made available in both local and import markets, indicating that the condition is in favour for sellers. “We are asking for $10/ton discount on Philippines homo-PP cargoes, yet the supplier rejected the bid almost immediately,” a Vietnamese buyer received offers for Philippines homo-PP at $1190/ton CIF, LC AS term said. Local offers for homo-PP in Vietnam firmed up VND100,000-200,000/ton ($5-9/ton) week on week.

On the other hand, overseas suppliers are indicating the intension to keep January shipment offers stable from December, citing the current supply-demand condition. “Any further hike is not supported by demand while we are not having high inventories,” a Saudi Arabia producer said.     

Polyethylene (PE)

Regional sources are seeing better number of purchase inquiries for HDPE blow moulding given the spillover effect from the recent shortage observed in the nearby China market. “We have sold out in previous week at $1200/ton CIF Vietnam, LC AS term. Many regular buyers are still asking for quantity and we need to wait for feedback from principal supplier,” an international distributor said.

It appears that Iranian suppliers are gradually resuming production, which has been disrupted for months due to a major gas leak. Quantity is now available at $1300/ton for HDPE film, $1240/ton for LDPE film and $1160/ton for LLDPE film, all based on CIF Vietnam, LC AS term. “However, export allocation is yet to reach normal state, from which the supplier only agree to $5/ton discount on all cargoes,” a trader said.