Asia Daily PP and PE Overview 10 April 2018

CHINA

• Demand for both import and local cargoes continues to pick up
• Players hold positive expectation for the near-term outlook

Polypropylene (PP)

Purchasing interest in local ground holds strong which helps in moving total inventories at Sinopec and CNPC warehouses to the pre-holiday level of 840,000 tons, a reduction of 30,000 tons day on day. A number of traders started limiting the offered quantity to the market with an expectation that prices would see additional increases in the next trading day. Spot homo-PP traded in Eastern China at CNY‎‎‎8850-8950/ton ($‎‎1201-1214/ton without VAT), up CNY50/ton ($8/ton) from yesterday.

The strong local market sentiment is lending sufficient support to overseas sellers to lift offers to China. Import homo-PP below the $1200/ton threshold is becoming scarce, and yet there are no signs of any panic buying. “We are still offering regular homo-PP to export market at $1300/ton FOB China, LC AS term. Buyers are still placing more preference on domestic materials, which might limit any drastic surge in import prices,” a Chinese trader commented.   

Polyethylene (PE)

Import offers for PE have mostly increased $10-30/ton from last week and deals have been realised at the latest price levels. Major Thailand maker lifted PE prices twice in a single trading day to conclude deals at $1265/ton for LLDPE film and $1410/ton for HDPE film, all based on CFR China, LC AS term. All available quantities for LLDPE film are sold out at the time this report is published while only several deals for HDPE film are observed. A trader purchased the LLDPE film cargoes said, “We requested for 216 tons and only managed to obtain 50% of the needed quantity. The market is very happening and it is a clear sign that prices have entered the upward trend.”

Meanwhile, most Saudi Arabia HDPE film cargoes remain in the range $1320-1360/ton CFR China, LC AS term. A trader managed to sell off 600 tons of the said cargoes at $1330/ton informed, “Our customers are still negotiating very hard for HDPE film. It might be difficult for us to achieve large price hike, however, one thing clear is that market is firming up,” another international trader added. 

SOUTHEAST ASIA 

• Overseas PP suppliers are confident about the current firming trend 
• Regional PE market remains sluggish despite healthy buying interest in China

Polypropylene (PP)

After lifting import homo-PP offers to Vietnam in the previous trading day by $10/ton, a major Saudi Arabia producer maintains a firm stance on the cargoes, insisting to close deals at $1250/ton CIF, LC AS term. “We have very little concern over these cargoes as the market is regaining its strength. Prices still have room for further increases, therefore, we only concentrate on selling other materials,” an international distributor informed.

On the other side of the market, buyers are not convinced of any possible drastic hike in the coming weeks citing the general dull condition across South and Southeast Asia region. “We agree that market has reached the bottom and thanks to the healthy recovery in purchasing interest in China, prices might regain some strength. In the meantime, we have to acknowledge the limitation of the uptrend,” a buyer commented. 

Polyethylene (PE)

New import offers for PE to the region are rather limited, however, domestic ground in most Southeast Asia countries is suffering from unmovable demand condition. “Our suppliers have been calling to push cargoes. Demand for our end product is not very strong as it supposed to be during the Ramadan preparation, and the upcoming general election makes the situation becomes even more unpredictable. Therefore, we plan to buy only a small quantity,” a Malaysian converter said.

Meanwhile, in Vietnam, a couple of major traders continue selling below market levels to generate cash flow. This has had buyers in the country concern heavily about the near-term outlook, though some decided to make replenishment given the price attractiveness. “We purchased regular Saudi HDPE film at VND33,600,000/ton including VAT ($1338/ton without VAT), FD Vietnam, cash term, which is about VND700,000/ton ($31/ton) below market level for the same cargoes. As a result, we really doubt if import market could rebound strongly,” a flexible packaging converter in Vietnam reported.