Asia Daily PP and PE Overview 12 April 2018

CHINA

• Local inventories fell to below 800,000 tons mark for the first time in nine weeks
• Sentiment shows sign of cooling down after two consecutive weeks of active buying 

Polypropylene (PP)

Total PP and PE inventories at major domestic producers’ warehouses fell another 20,000 tons day on day to approximate 780,000 tons as of 12 April 2018. This is the first time on-hand stock at Sinopec and CNPC drop below the 800,000 tons threshold in nine weeks, thanks to strong purchasing activities over the past week.

However, sentiment seems calmer toward the end of the week, leading suppliers to commit to CNY50-100/ton ($8-16/ton) discounts with hope to smoothen sales process. “Sales drop slightly today, though we remain optimistic about the near-term outlook given a series of maintenance shutdown taking place in April and May,” a trader commented. To confirm the situation, a coal-based PP producer said, “Our customers have stocked up comfortable inventories and started to take a break. Besides the discount given on spot homo-PP cargoes, we are open to negotiation with serious buyers now.”

Polyethylene (PE)

There have not been any major changes in the PE market and players reported of achieving better deals than PP. After a major Thailand producer concluded import HDPE film at $1410/ton CFR China, LC AS term; a Taiwanese maker is targeting the same price levels. “We rejected all bids below the $1400/ton threshold and only managed to sell a small quantity to Sothern China market. We plan to hold firm on the cargoes amid strengthening upstream ethylene market,” a distributor source added. 

SOUTHEAST ASIA 

• Indonesia PP market remains struggle as local traders extended forward selling
• Strong upstream markets to support the general sentiment

Polypropylene (PP)

The Indonesian PP market might take a little longer to catch up with the firming trend that prevail the Asia region throughout this week. Persistently sluggish demand condition, coupled with intense competition among local and overseas suppliers are putting the market in a very undesirable condition.  Major local suppliers in Indonesia continue to forward-selling cargoes for May delivery with strong willingness to negotiate with serious buyers. “Our supplier open offers for yarn grade at IDR17,500,000/ton ($1270/ton) without VAT, FD Indonesia, cash term and currently inviting for bids. We are asking for larger than usual discount and currently waiting for the supplier’s feedback. If our bids become successful, import market would suffer from more pressure,” a converter reported.

Indonesia in the near-term outlook might not be an ideal export destination for many overseas sellers, however, the sentiment might improve toward June, when the renewal of the Import Duty Borne by the Government (BMDTP) scheme comes to completion.   

Polyethylene (PE)

The number of actual transaction for import PE to the region remains below expectation, however, with stronger energy complex as well as upstream ethylene market, players started having more confidence in the near-term outlook. “Demand has been weak, however, we think prices are less likely to reduce again. The market might not witness any drastic increases amid the fast approaching ChinaPlas Exhibition and the fasting month, however, sentiment shall slowly improve,” an international trader said.

In spite of better supply condition for HDPE film in China and Vietnam, market like Malaysia and Philippines are still in short of this grade. Philippines buyers, therefore, have a better expectation for the local PE market, while sentiment in Malaysia is overshadowed by the upcoming General Election on 9 May 2018. “We are more positive about the demand condition for the second half of the year. At the moment, sales are very disappointed despite the fact that we are selling below producer’s price list,” a local Malaysian trader said.