Asia Daily PP and PE Overview 12 March 2018

CHINA

• Local PP, PE inventories surged above 1 million tons threshold
• More import HDPE film move to the left side of the $1400/ton mark on soft demand

Polypropylene (PP)

Total PP and PE inventories at major domestic producers’ warehouses surged more than 60,000 tons over the weekend to reach 1.005 million tons as of 12 March 2018. Prolong inventories pressure continue encouraging local traders to offers discount of CNY50-100/ton ($8-16/ton), bringing homo-PP prices to CNY‎‎‎8750-8900/ton ($‎‎1181-1202/ton without VAT), EXW China, cash equivalent.

Competitive domestic cargoes make import parcels looks not very attractive and as a result, overseas sellers are not putting attention on China market, “Instead, we are diverting cargoes to South Asia region, where demand is much healthier,” an international trader commented. At the time this report is published, import homo-PP from dutiable origin stands in the range $1250-1260/ton, CFR China, LC 0 – 60 days term.

Polyethylene (PE)

While many major international suppliers have yet to announce new offers on the first trading day of the week, many HDPE film cargoes are moving towards the left of the $1400/ton mark. Even highly wanted Iranian HDPE film 7000F cargoes are now offered in the range $1370-1380/ton, CFR China. “Saudi Arabia suppliers are still insisting on the price range $1400-1430/ton citing the limited supply. However, there is no support from the demand side. We hold conservative stance and expect to see the soft trend to persist throughout March,” a buyer said.

SOUTHEAST ASIA

• Import homo-PP soften slightly on weak fundamental
• Local suppliers stepped back on PP, PE offers in Indonesia and Vietnam

Polypropylene (PP)

There are very limited new import offers to the region on the first trading day of the week, however, persistent sluggish demand condition and lower upstream costs are opening the path for a softer trend to take place. In fact, latest price level from Southeast Asian, Saudi Arabia and Chinese suppliers are indicating $10-20/ton reduction week on week, though deals remain mediocre.

A conservative buyer purchased Saudi homo-PP at $1290/ton CIF Vietnam, LC AS term said, “We only procure minimum quantity. Vietnam market is entering the traditional slow demand season and it is very likely that prices might face further cuts in the near term.” Domestic traders are not showing interest in replenishing at the current levels citing more competitive cargoes are available in the local ground.  

Polyethylene (PE)

Despite having improved end product demand ahead of the Ramadan season, Indonesian buyers remain inactive in sourcing additional cargoes. As a result, a major domestic producer once again steps back on LLDPE film offers approximate $20/ton while keeping HDPE unchanged. “Sentiment is not strong and we are covered for April. The supplier might need to concede to additional discount in order to move cargoes, hence we are on the wait and see mood,” a buyer said.

A similar situation is observed in local Vietnam, where concern over the near term market prospect is getting stronger as China proved unable to destock post-holiday inventories as quickly as expected. Local traders are offering discounts following the two-time price adjustments from a major Saudi Arabia maker in the previous week, “And yet, sales have been disappointed,” a source said.