Asia Daily PP and PE Overview 5 February 2018

CHINA

• Spot offers soften in local market amid rising commercial inventories
• Forwards selling activities prevail local ground

Polypropylene (PP)

Total PP and PE inventories at domestic producers’ warehouses rose nearly 100,00 tons throughout the weekend to 680,000 tons as of 5 February 2018. Though there are still some hand-to-mouth purchasing activities, however the general sentiment is gradually taking off. Traders therefore are forward selling cargoes at CNY50/ton below current market levels for delivery after the holiday.

Polyethylene (PE)

Major Singaporean maker lifted offers for metallocene PE (mPE) by $30/ton week on week to $1410/ton CFR China, LC AS term after achieved satisfactory sales in the previous week. No immediate deals have been reported. At the meantime, Thailand maker did not open any new offers due to on-going production issues at the new PE plant. Players are expecting the firm trend to persist as supply for mPE seems to be tightening.

At the meantime, it is widely perceived that local market might temporarily find itself in the stable condition in the coming days with small discount become available on deals, as producers might rush to achieve monthly sales target before the holiday. “However, we have yet to receive any clear instruction from the producer, hence still in the wait and see position,” a distributor said.  

SOUTHEAST ASIA

• The firming trend persist
• Falling propylene costs strike further concern about PP market

Polypropylene (PP)

A major Saudi Arabia maker reportedly allocate additional cargoes to Vietnam with $60/ton increases from late January to $1320/ton for homo-PP and $1330/ton for PP block copolymer, all based on CIF Vietnam, LC AS term. The hike again faces serious resistance from market and no deals have been reported. “Our principal supplier might divert the cargoes to other markets where acceptance level is higher,” a distributor said.

Propylene costs fell for the first time since late November 2017, slashing $15/ton on 2 February 2018 due to weaker buying interest from Chinese customers. This appears to have reiterated market expectation that PP market is reaching a cyclical peak.

At the meantime, heavy downpour and flood in Indonesia might continue to dampen demand in this market, from which traders become a little more frustrated with sales result for homo-PP yarn in recent days.    

Polyethylene (PE)

There are very limited new offers available on the first trading day of the week, yet Thailand major are expressing firm gestures in implementing at least $20-30/ton increased on the next price announcement. “And we shall expect new HDPE offers to get closer to the $1450/ton mark. Demand is slow given the fast approaching holidays, at the meantime, supply is not there, and hence we do hold positive attitude for the near term outlook,” a distributor commented.