Asia Daily PP and PE Overview 25 January 2018

CHINA

• Pre-holiday demand still exist
• Import HDPE film above $1400/ton threshold shy buyers away

Polypropylene (PP)

Total PP and PE inventories at major domestic producers’ warehouses fell to 570,000 tons as of 25 January 2018, reflecting the steady demand condition in local ground. In fact, converters are finding it hard to cope with the recent high raw material costs, yet fear of further hike after the Lunar New Year term; hence many are still placing orders at the moment. “Besides, delivery charges might also increase as the holiday draw near and unfavourable weather condition. It is better to arrange stock this week,” a source added.

In the import market, traders are not willing to enter any price negotiation for Saudi Arabia origin homo-PP cargoes, steering prices below the $1240/ton to the scarcity zone. “There are obviously some resistance. The thing is that supply is not there while it appears that USA market might be more attractive for overseas sellers at the moment. Market shall have to accept the current trend,” a source added.

Polyethylene (PE)

Import HDPE pipe to China remains in the hot zone with prices ranging $1500-1600/ton CFR China, for Saudi Arabia and Taiwanese origin, regular pipe-100 natural colour grade. Prices might hold strong as Chinese government put extensive effort in building gas distribution pipeline with aim to reduce the use of coal in generating heat. “At the moment, HDPE blow moulding is also limited. Many suppliers prefer to withhold cargoes, expecting prices might be stronger after the holiday,” a trader said. Import HDPE blow moulding to China currently stand at $1290-1380/ton CFR China, LC 0 – 90 days term.

Import HDPE film for regular origin holds above the $1400/ton mark toward the end of the week. Looking ahead, market potentially touch the $1450/ton threshold though many traders are refraining from making fresh purchases to due to high price risk.

SOUTHEAST ASIA

• More producer lifted February shipment offers
• PP outlook remains stable to firm on restricted availability

Polypropylene (PP)

Traders, who have been actively offers the limited on-hand cargoes to the market over the past sessions have now either sold out the cargoes or withdrawn offers. Vietnamese buyers reported difficulties in sourcing quantity towards the end of the week with an international trader informed, “We have suspended all offering for Saudi homo-PP at $1265/ton CIF Vietnam, LC 30 days term. There were not any discount available and we are planning to keep the prices firm in the near term.”

Import PP market in Indonesia is catching up though purchasing interest remains lax. Regional players are gradually putting heavier bet on a sustainable firming trend amid persistent supply tightness condition. Bad weather has caused a number of crackers and PP, PE units in the USA and South Korea to shutdown, which might be translated to the reality that USA cargoes might take longer to emerge in Asia, not only due to strong local market there but also due to the lack of cargoes.    

Polyethylene (PE)

Another Saudi Arabia producer announced February shipment offers to Vietnam with large hike, especially on HDPE blow moulding cargoes, which see $110/ton increased month on month to $1320/ton CIF Vietnam, LC AS term. Active buying for LLDPE film is reported. A distributor said, “Market is moving fast. Tightening supply for LLDPE film has got a grip on buyers. Our offers are relatively competitive, hence managed to attract buying attention.”

Import HDPE blow moulding to Southeast Asia is currently the next-in-line to witness a positive spill-over effect from strong demand in the nearby China market after HDPE film. Following this order, it is expected that HDPE yarn would soon follow the trend and that buyers are preparing for such event to take place.