Asia Daily PP and PE Overview 29 January 2018

CHINA

• Limited trading activities on the first trading day of the week
• Import market moves higher, buyer resistance categorised under medium-low stage

Polypropylene (PP)

There are very few actual transactions on the first trading day of the week though it is expected that demand shall remains steady this week as buyers need to make final round of purchasing before going off for Lunar New Year holiday. Domestic suppliers introduced CNY50-100/ton ($8-15/ton) hike on spot homo-PP cargoes to local buyers.

In the import ground, offers for Indian and Saudi Arabia cargoes stand at $1250/ton CFR China, LC 90 days term. “Buyers are no longer aggressive in scouting for import cargoes given now that local materials are available at relatively competitive levels,” a trader commented. And yet, interest for non-dutiable cargoes seems to be better.

Polyethylene (PE)

Overseas sellers, including Qatar and Singaporean producers announced new offers with $20/ton increased week on week on LDPE film and mPE cargoes respectively to the origins. No immediate deals are observed at the time this report is published, however, sources are pointing to the lack of inventories pressure and weak US dollars to be the support of the current persistent firming trend.

A small quantity of USA origin HDPE injection emerged at $1220-1230/ton CFR China, LC 90 days term and in spite of the long shipping time, traders have purchased the cargoes concerning that import arrival in late quarter 1 would be insufficient to meet demand. 

SOUTHEAST ASIA

• More producer lifted February shipment offers with three-digits hike
• Plunging ethylene costs affected little on buying interest

Polypropylene (PP)

There are very few offers observed in the market with $10-20/ton increased from last week and the drastic hike in propylene costs last Friday is having positive expectation among regional buyers. In fact, many are expecting to see offers for dutiable homo-PP cargoes to reach the $1300/ton within days. “There is a $35-40/ton hike in Philippines homo-PP cargoes this week to $1350/ton CIF Vietnam, LC AS term. We are placing bids at $1300/ton to place some purchases. With propylene surged to multi year high levels, it is likely that PP market would follow,” a Vietnamese buyer commented.

Propylene based on FOB South Korea term jumped $60/ton on 26 January 2018 to $1080/ton – the highest level traded since 20 November 2014, when it stood at $1075/ton on the same term. Tightening supply is the main factor steering market higher though demand in China seems weakening, as buyers here have already completed pre-Lunar New Year replenishment. Theoretically, there is a wide arbitrage window opened for Asian propylene suppliers to divert cargoes to the USA, however, in actual, few have done it due to difficulties in arranging shipment.

Polyethylene (PE)

Another Saudi Arabia producer introduced $100-130/ton hike on import HDPE and LLDPE film to the region, bringing latest price list to $1410-1420/ton for HDPE film and $1290/ton for LLDPE film. Buyers are astonishing, however many are planning to accept the latest offers amid lack of availability. “We have also purchase South Korean LLDPE film cargoes at $1310/ton CIF Vietnam, LC AS term. Supply is very tight,” a buyer commented.

In Indonesia, a major domestic producer here pushes HDPE film prices up twice today, totalling a $95/ton hike in one single trading session, bringing latest price list for this grade to nearly $1665/ton FD Indonesia, cash term. “And therefore, we might proceed with purchases for import Singaporean HDPE film at $1500/ton CIF Indonesia given large price gap. We are not seeing any possibility that prices could go down in this quarter, and currently planning for April inventories,” a HDPE bag manufacturer commented.