Asia Daily PP and PE Overview 4 April 2018

CHINA

• Domestic demand remains stable
• Hike in import PE might prove too hasty

Polypropylene (PP)

Total PP and PE inventories at major domestic producers’ warehouses fell another 50,000 tons from the previous trading day to approximate 830,000 tons as of 4 April 2018. Trading activities in local ground remain satisfactory despite the fact that futures market has been traded range-bound.

Converters in the BOPP sector continue facing below expectation end product orders, however, woven bag and transparent packaging sector are enjoying the high demand season. “We continue to procure cargoes from local suppliers. Import market might hold stable in the near term and depend on the sustainability and the extent of firming local ground, overseas sellers might only able to lift offers slightly,” a buyer commented.   

Polyethylene (PE)

Import LLDPE film below the $1150/ton threshold has disappeared from the market after mass purchases last week. There are very few offers available, which encouraged major Thai maker to lift LLDPE film prices by additional $5-10/ton to $1250-1255/ton CFR China, LC AS term. However, though the move is intended to test market’s response, however, it seems a little too hasty as buyers immediately suspended purchases after the adjustment. “We have to revert the increases soon after. We decided to wait until next week for clearer market direction before making any further decision,” a source closed to the producer said.     

SOUTHEAST ASIA

• Regional makers opt for a softer stance on cargoes to Indonesia
• Buyers show concern about the prospect rebound

Polypropylene (PP)

There are very limited new offers, especially from dutiable origin to the region. The bottom-price effect does not seem strong enough to endure sustainable purchasing interest and while overseas sellers are posting intention to keep offers firm, buyers started talking resistance. “Domestic market firmed up slightly compared to earlier this week, however, sales have been slow. We think there is very limited room for homo-PP offers to surge, and therefore, we are not planning any large buy at the moment,” a Vietnamese converter said.

Meanwhile, a major local producer in Indonesia has joined the league by selling homo-PP yarn based on FD Indonesia, cash equivalent at $1265/ton without VAT – the level that prevails distribution market since last week. “Forward-selling for most other grades are good, except homo-PP yarn. Import market might suffer from deteriorating demand since buyers are increasingly putting more favour on domestic materials,” a supplier source commented.

Polyethylene (PE)

Most suppliers claimed healthy sales result for Middle Eastern PE cargoes, though any price hike might only take place in the coming week. The market is a little concern over the escalated trade tension between China and the USA, which resulted in China plans to implement 25% tariff on import LDPE, PVC and ACN from the USA. A converter said, “The macro trade environment is very unfavourable to a firming price trend. We have bought a considerable quantity of material over the last trading days and might withdraw to the sideline to avoid risk.”

Meanwhile, Thai maker implemented $30/ton reduction on import HDPE to Indonesia compared to mid of March,bringingg latest price list to $1580/ton CIF, LC AS term. Deals are seen with additional $90/ton discount at $1490/ton with the same term. “We manage to deplete most of the PE cargoes after the cuts. We would only decide on further move in the coming week,” a source close to the producer said.