Asia Daily PP and PE Overview 16 April 2018

CHINA

• Domestic market hold steady amid piled up inventories 
• Limited import offers at firmer levels 

Polypropylene (PP)

Total inventories at major domestic producers’ warehouses pile up 70,000 tons over the weekend to reach approximate 860,000 tons as of 16 April 2018; however, this is not enough to pressure prices to move lower. Spot offers remain unchanged from last week and buyers are actively checking on the new offers, though very few deals have been achieved. “We expect local producers to keep offers steady in the coming days considering the heavy maintenance shutdown schedule that tighten local supply. However, demand is not supporting any strong rebound,” a trader said.

Only couple of traders open news offers for import homo-PP originated from India at $10/ton higher than last week to $1200-1210/ton CFR China term. “Our customers are watching out for the next movement in the futures market before making decision. Looking ahead, the market is firm, yet we are not confident in achieving great sale result,” a trader commented. 

Polyethylene (PE)

The agricultural film season that has been keeping local LLDPE film market firm over the past month is coming to an end, sources said. And as a result, it depends on the purchasing activities from packaging sector to keep the sentiment firm. 

In the meantime, import HDPE film to China continues to inch higher. On an average, import HDPE film to China gained $5/ton from last week. Players are expecting this trend to persist in the coming weeks given that several Iranian and local plants have switched to produce HDPE pipe grades due to better profit margins, which might affect the availability of film and blow moulding grades.  

SOUTHEAST ASIA 

• Saudi maker cut May PE offers to the region 
• Limited PP offers with market expectation point to stable to firmer trend 

Polypropylene (PP)

There are very limited new PP offers observed on the first trading day of the week, however, regional players are expecting prices to remain on the stable to firmer track. “Buyers are very active in checking for new offers given the recent surge in the upstream market. As a result, we hope to achieve a small hike this week,” an international trader said, adding that new offers would emerge in the next trading day.

In Indonesia, demand for homo-PP remains sloppy, however, suppliers are not willing to give further discounts. “Cargoes at the price level IDR17,300,000/ton ($1255/ton) is no longer available this week, instead, our supplier opened offers at IDR17,700,000/ton ($1285/ton), without VAT, FD Indonesia, cash term. We have already stocked up comfortable inventories and might only wait on the sideline in the near term,” a converter reported.  

Polyethylene (PE)

A major Saudi Arabia producer announced fresh PE offers for May shipment to Southeast with $50/ton reduction month on month. Latest price list to Vietnam stands at $1190-1200/ton for LLDPE film and $1360/ton for HDPE film, while to Indonesia, the marker keeps the offers at $1180-1190/ton for LLDPE film and $1340/ton for HDPE film, all based on CIF, LC AS term. A buyer said, “Some other Middle Eastern cargoes have concluded deals at $1140-1150/ton for LLDPE film and $1310/ton for HDPE film, and therefore, we expect to achieve similar levels for the latest offers. It appears that sellers are still amid depleting inventories ahead of the Ramadan season.” 

Local PE market in Indonesia remains firm and while a major producer keep offers for HDPE and LLDPE film unchanged week on week, traders are complaining these levels are underpriced. “We have sold out most of the LLDPE film inventories and suspended all offering for this grade this week. Demand is coming back and we expect local producers to lift offers soon,” a local trader said, adding that domestic cargoes are underpriced at the moment.