Asia Daily PP and PE Overview 29 March 2018

CHINA

• Local inventories continue to deplete
• Import Saudi homo-PP slipped below the $1200/ton threshold

Polypropylene (PP)

Total PP and PE inventories at major domestic producers’ warehouses continue to fall another 30,000 tons from the previous day to 850,000 tons as of 29 March 2018, which underlines an improved in demand. Traders are attempting to hold firm on the cargoes to test market respond; however deals for spot homo-PP in Eastern China are CNY50/ton ($8/ton) lower, at CNY‎‎‎8500-8600/ton ($‎‎1155-1169/ton without VAT).

In the import market, a major Saudi Arabia producer announced new offers to China at $1180/ton for homo-PP and $1200/ton for PP block copolymer, all based on CFR China, LC AS term. The move is much in line with buyer expectation after Indian and Russian cargoes concluded in the previous week at $1170-1180/ton. However, buyers are pressing import offers lower by mostly placing bids at $1150/ton level.    

Polyethylene (PE)

The Chinese government has announced to cut domestic value-added tax (VAT) across the manufacturing sector in the country by 1% to 16% starting 1 May 2018. Also, officials decided to raise the threshold of taxable annual sales volume for industrial and commercial enterprises from 500,000 Yuan and 800,000 Yuan, to 5 million Yuan. This move is expected to benefit all small to medium size company.

Coming back to the PE market, things have not been very bright toward the weekend. Import LLDPE film remains soft in the range $1130-1160/ton for regular Saudi Arabia cargoes. Good news is that good numbers of deals are taking place.

More suppliers are moving import HDPE film offers to below the $1300/ton threshold on the back of improving domestic supply and sluggish purchasing interest. In spite of the fact that local inventories have been digested quickly this week, players are not confident that market is set for a rebound.

SOUTHEAST ASIA

• Import PP, PE continue to journey south
• Buying interest dimmed as expectation for further reduction prevail

Polypropylene (PP)

Import offers for Middle Eastern homo-PP to Vietnam continue to see $10-20/ton reduction compared to earlier this week, with a deal for injection grade originated Saudi Arabia reported at $1200/ton CIF Vietnam, LC AS term. Buyers in the country immediately turn cautious and many have planned replenishment only when prices breach below the $1200/ton threshold.

As expected, domestic traders in Indonesia stepped back on local homo-PP cargoes after nearly four weeks of holding prices stable. Deals are observed at $1265/ton without VAT, FD Indonesia, cash equivalent for large purchases, a $20-25/ton decreased. “Demand in Indonesia drops visibly this week. Ramadan season is not sufficient in stimulating market,” a trader said.

Polyethylene (PE)

A number of international suppliers agreed that near-term market outlook is not very optimistic for the PE sector. The market is expecting higher monthly allocation from Middle Eastern suppliers in the coming weeks given the need to deplete materials ahead of the long Ramadan holiday in the second half of June. However, considering the active maintenance shutdown in recent months, sources are not expecting a too significant impact on the pricing.