Asia Daily PP and PE Overview 9 March 2018

CHINA

• Local market might stabilise after five straight falling sessions
• Purchasing appetite for import materials remains weak, traders push for re-export

Polypropylene (PP)

Total PP and PE inventories at major domestic producers’ warehouses pile up slightly from the previous trading day to approximate 945,000 tons as of 9 March 2018. The softening trend in the domestic ground is not slowing down. Spot offers for both PP and PE fall another CNY50-100/ton ($8-16/ton) day-on-day amid persistent sluggish demand. Homo-PP offers in Eastern China stand in the range CNY‎‎‎8850-9000/ton ($‎‎1193-1213/ton without VAT), EXW China, cash equivalent.

On a positive aspect, offers at the lower end of the overall price range might be more stabilized in the coming days, as buyers are showing better acceptance toward these levels. However, the cautious stance remains strong after a minor pile up in local inventories. “If total PP and PE inventories at major domestic producers’ warehouses reach the 1 million tons threshold after the weekend, the market might turn soft again. We prefer to take a conservative stand for now,” a trader said.

Polyethylene (PE)

Converters in the agricultural film sector are yet to see improved end product orders from commercial buyers. “Governmental orders are steady. We think if raw material prices reduce by additional CNY200-300/ton ($32-47/ton), commercial buyers would place more orders. At the moment, we are operating on remaining stocks, hoping to obtain an additional discount in the near term,” a manufacturer in Northern China said.

In the import ground, LLDPE and LDPE film buyers continue to receive softer offers as constant falling local prices started to pressure overseas sellers. Indian LLDPE film fell as much as $15/ton from earlier this week to $1165/ton CFR China, LC 90 days term with a trader said, “It is very difficult to attract deals this week. We are having some Saudi LLDPE film cargoes at the bonded warehouse at $1240/ton and yet, unable to find buyers.”

SOUTHEAST ASIA

• Saudi major implements fresh cut on PE to Vietnam
• Purchasing interest remains sluggish

Polypropylene (PP)

There are very limited new offers observed on the last trading day of the week and it seems the tug-of-war between limited availability and persistently weak demand is getting more intense. “We are not planning for any new purchases at the moment as prices are too high while the local ground is on the downtrend. Besides, May and June is the traditional slow season and we prefer to avoid price risk,” a Vietnamese trader receive offers for Saudi homo-PP at $1310/ton CIF, LC AS term said.

Polyethylene (PE)

After slashing March shipment offers for PE to Vietnam by $20/ton earlier this week, a Saudi Arabia producer implemented additional $20/ton reduction on the final trading day of the week, as sales results have been unsatisfactory. Latest price list stands at $1240/ton for LLDPE film and $1410/ton for HDPE film, all based on CIF Vietnam, LC AS term. The producer managed to sell off all available quantity of HDPE film while still struggling to attract demand for LLDPE film. A local trader said, “We still find the adjusted prices not very competitive. Domestic demand is very weak and we have to cut offers to deplete inventory. Supply for LLDPE film is comfortable, which might drag market lower in the near term.”

More sources in Indonesia reported seeing better demand from the flexible packaging sector in preparation for the Ramadan season. Though buyers have accepted the current market price levels, purchasing activities are not very strong. “We hope market become more active in the coming week, in line with tight supply, stronger upstream market and improving demand condition,” a trader said.