Asia Daily PP and PE Overview 18 December 2017

CHINA

• Domestic offers resumed weakening trend
• Buyers cautious on thin profit margin

Polypropylene (PP)

Firmer futures market does not seem to support the sentiment in the spot ground. Local suppliers continue to offer CNY50/ton ($8/ton) discount to encourage buyers to make fresh replenishment as sluggish demand condition persist. However, buyers do not find the current market prices to be attractive given thin profit margins. “At the meantime, window of opportunity to export coal based PP to Southeast Asia is narrow, since demand in this region is weak. Local market might remain our focus at the moment,” a coal based PP maker said.

There has not been any major movement in the import ground. The lack of volatility in import homo-PP market is concerning many players. It appears that Chinese buyers are still placing heavy preference on domestic materials for prompt delivery schedule and competitive costs.      

Polyethylene (PE)

Similar to the PP sector, local suppliers offer up to CNY100/ton ($15/ton) discount, even for HDPE cargoes, and yet buyers only purchase hand to mouth basis. Players are having diverged opinion regarding the near term market outlook, however, shared similar view regarding the post Lunar New Year demand prospect. “Market might be softer toward the end of Q1 2018 due to expected rising deepseas supply,” a source said.

Indian suppliers are very active in collecting bids for import PE cargoes, though very few deals observed due to the unfamiliarity of the grades. “We even received offers for re-export Indian LLDPE film and HDPE yarn from Vietnamese traders. We are considering the HDPE yarn grade if the supplier could concede some discounts,” a trader said.

SOUTHEAST ASIA

• Market await January shipment offers
• Sentiment is calm ahead of holidays season

Polyethylene (PE)

Indonesian buyers are astonished with the latest HDPE offers from a major domestic producer as prices surged IDR820,000/ton ($60/ton) week on week despite diminishing buying interest. “We have done purchases for the year and currently away for holiday. We are unable to accept the latest prices,” a converter commented. Many buyers in Indonesia are leaving their desks for Christmas and New Year holidays, indicating a limited trading activities week ahead. Sources are speculating that the latest price increments purely act as a gateway bringing market to a new year at the high side. “As to so, we think it is less likely buyers would accept deals at price list,” a source commented.

Regional players are also awaiting new offers from international suppliers with most expectation calling for stable levels from last month. “Indian LLDPE film offers are too competitive, which anchor the market from further advancement despite strong upstream ethylene costs. We plan to slow down purchases since outlook after Lunar New Year is rather cloudy,” a Vietnamese trader said.

Polypropylene (PP)

There are very limited numbers of new offers observed in the market though suppliers are attempting to hold prices on the stable to firmer track. Buyers are becoming more cautious and several decided to withdraw to the sideline. A Vietnamese buyer received offers for Thailand homo-PP at $1200/ton CIF said, “We have comfortable inventories at the moment and are not planning to make additional purchases. Medium term outlook remains questionable, hence we prefer to be cautious.”

Trading activities in Indonesia are quiet in the absence of buyers. A regional trader offered import homo-PP at $1220/ton for Vietnamese origin and $1170/ton for Middle Eastern origin, all based on CIF Indonesia, LC AS term. The source added that available quantity is rather small, “And even with many regular buyers have taken off, we plan to hold firm due to lacking inventories pressure.”