Asia Daily PP and PE Overview 2 January 2018

CHINA

• Strong futures market boost spot sentiment
• Real demand remains soft

 Polypropylene (PP)

Due to the long weekend holiday, total PP and PE inventories at domestic producers’ warehouses rose 140,000 tons from last Friday to 680,000 tons as of 2 January 2018. However, thanks to strong futures market, arbitrage traders are very active in channeling cargoes from spot ground to take advantage of the price gap. Market therefore, is not showing much concern over the built up inventories. Spot offers are CNY50-200/ton ($8-31/ton) higher than late last week.

In the import ground, buyers have accepted certain Saudi Arabia homo-PP cargoes at $1180/ton CFR China, LC 90 days term with a source adding, “Local prices have been firming up recently and creating a gap with import market. Besides, there are very limited offers from overseas sellers.”   

 Polyethylene (PE)

Domestic suppliers introduced similar hike of CNY50-200/ton ($8-31/ton) on local PE cargoes and most cargoes takers are traders. Meanwhile, converters are more conservative as many are resisting the current market levels.

Supply for HDPE yarn in both local and import market seems to be tight and deals for Indian HDPE yarn are reported at $1220/ton CFR China, LC 90 days term. “Our Uzbekistan supplier might only be able to allocate cargoes to export market after the Lunar New Year due to some persistent plant issues. This, together with the slump in import plastics waste that very likely affect the recycle industry, might keep the HDPE sector on the firm notes in the coming week,” a trader commented. 

SOUTHEAST ASIA

• Limited trading activities after the holiday
• Near term outlook expected stable to firm

There are very limited movements observed in Southeast Asia, as many companies are yet to resume normal working after the holidays. A major producer in Indonesia, however, opens fresh PP and PE offers to local buyers with increases of up to $20/ton on PP cargoes. Trading activities remain weak here and the increases in homo-PP prices, especially yarn grade might not attract much buying attention, player said, given the fact that distribution market has been offering discounts since before the holidays. More movement might emerge toward the end of the week.

Vietnamese players are on the watch out for the next development and no overseas seller open fresh offers today. However, most are looking at the continued stable to firmer trend from late December. “Import offers have been above acceptance levels, hence we only source from local market to meet immidiate requirement,” a trader said.

With upstream ethylene and propylene markets extended the firming trend, it is less likely that downstream PP and PE suppliers would concede to large discount in the near term, especially when the general supply condition is tight. “We have sold out all available allocation for both PP and PE in the previous week. We have additional inquiries and still waiting for feedback from our principal Saudi supplier,” a distributor said.