Asia Daily PP and PE Overview 9 February 2018

CHINA

• Trading activities slow down visibly due to holiday mood
• Chinese PP producers actively open export offers

Polypropylene (PP)

Total PP and PE inventories at major local producers’ warehouses remain unchanged at approximate 635,00 tons compared to the previous trading session due to slower trading activities in the absence of buyers. More companies started going off for the long Lunar New Year holiday, which might continue to drag the sentiment down in the coming days.

Couple of major local producers becomes more active in offering export cargoes for regular homo-PP in the range $1280-1300/ton FOB China, TT in advance term. While there is little interest from Southeast Asian buyers, suppliers find it more comfortable with orders from South America markets. “After adding the freight costs, traders are still able to make a good profit margins selling to America. We are not having large quantity, however prefer to unload some parcels to overseas market while domestic buyers are away for holiday,” a producer informed.

Polyethylene (PE)

There are very limited movements in PE sector and it becomes clearer that import offers for HDPE above the $1400/ton mark are not getting sufficient attention. “Even with the prolong tightness, we are unable to close any deal at $1450/ton for HDPE film cargoes to China. Instead, we managed to sell well to USA market at $1520/ton CIF for the same cargoes,” a Malaysian producer said. The source added the intention to keep minimal cargoes for Asia market amid deepened holiday mood.

SOUTHEAST ASIA

• Market sentiment declining on holiday mood
• Falling energy complex pinches market confident in near-term outlook

Polypropylene (PP)

The final trading day of the week underpin market expectation that import homo-PP might be nearing the peak. There are very limited new offers available, however dutiable homo-PP priced above the $1300/ton threshold continue facing tremendous difficulties to attract buying interest, despite the recent production disruption at Thailand’s SCG and Saudi’s Advanced Petrochemical Co.

“The energy complex has shredded most of its gains in 2018, which might affect the general buying sentiment. We have comfortable inventories until early April and might refrain from any fresh buy in the coming week. If market persist in the current condition, we do expect to see some discounts to emerge in the post holiday term,” a woven bag maker commented.

Demand for homo-PP in Indonesia is rather tepid and most buyers turn to local traders for needed quantity after receiving offers for duty free cargoes above the $1300/ton mark. “We received Thailand homo-PP at $1380/ton CIF Indonesia and struggle to locate a reasonable bids given that domestic traders are offering at $1315/ton FD Indonesia, cash term. Naturally, we would source from local market,” a buyer added.    

Polyethylene (PE)

Very few new offers are observed across the region and softening ethylene costs continue to cast shadow on market confidence. Many small to medium scale converters decided to wait on the sideline for clearer market direction instead of jumping into fresh buys at the moment. “Demand is so sluggish. Our customers plan to only replenish cargoes after the holiday even with higher prices,” an international trader selling deep-sea Middle East cargoes said.

Major Thailand maker introduced $60/ton on HDPE cargoes in the previous trading day to $1610/ton CIF Indonesia, LC AS term is now facing stiff resistance. Despite having portrayed the willingness to provide discount on deals, buyers are not convinced of the hike. “We are unable to transfer the costs to end product, hence could not accept such drastic increases,” a converter said.