Asia Daily PP and PE Overview 17 April 2018

CHINA

• Sentiment remains soft ahead of ChinaPlas 
• Heavy maintenance shutdown schedule support local trend 

Polypropylene (PP)

Total PP and PE inventories at Sinopec and CNPC’s warehouses fell 20,000 tons day on day to approximate 840,000 tons as of 17 April 2018. Purchasing interest is rather slack as converters decided to take a break to digest on-hand inventories. In the meantime, arbitrage traders are waiting on the sideline, hoping to see a rebound in September delivery contract before entering any real deals.

“However, local suppliers remain free from sales pressure amid heavy maintenance shutdown season, which supports prices from any major reduction. Our concern is on late April to early May period, when players are away for the Labour day that might exacerbate the calm demand condition,” a trader said.

In the import market, except for a minor deal for Indian homo-PP is concluded at $1190/ton CFR China, LC AS term, most other cargoes are reported at $1200-1220/ton with the same term. As local traders started cutting offers again, demand for import material might diminish, sources added. 

Polyethylene (PE)

Import offers for PE to the country are very limited and those available, are rather firm, especially for HDPE cargoes. Saudi HDPE film is priced at $1365/ton CFR China term with a trader said, “Buyers are more actively seeking for discounts in the local ground. At our side, supply is tight and as a result, we have no plan to concede to any large discount.” 

SOUTHEAST ASIA 

• Overseas PE suppliers started taking a firmer stance
• Dutiable homo-PP moved higher, competitive duty-free cargoes cap the momentum

Polypropylene (PP)

Major Saudi Arabia maker lifted homo-PP prices by $20/ton from last week to the region, bringing latest price list to $1270/ton CIF Indonesia and Vietnam, LC AS term. The hike is very much within market expectation; however, buyers are showing little interest in the cargoes citing comfortable inventories from previous purchases.“We have secured a total of 1500 tons of import homo-PP over the past two weeks and at the moment, we have no plan for further replenishment. The market is firm, yet we do not see a possibility of any drastic hike,” a buyer said.    

In the meantime, non-dutiable cargoes from Indonesia and Thailand are available in Vietnam at $1270/ton while deals for Chinese coal-based PP yarn are observed at $1240/ton CIF term. “Buyers are unable to cope with the latest increases. Middle Eastern suppliers might keep prices firm due to lacking sales pressure, however, the upside is limited,” said a trader. 

Polyethylene (PE)

It is important to understand that the latest price cuts from a major Saudi Arabia producer for May shipment do not send its price list to the lower end of the overall price range. Instead, the offers continue to linger near to the upper end of the range, which encourages other suppliers, whose prices were lower to implement new hike. As a result, the previous lows of $1310/ton for HDPE film and $1140/ton for LLDPE film, CIF Southeast Asia have not repeated this week. 

Several other international producers have introduced increases of up to $40/ton on PE cargoes to the region thanks to stronger upstream costs. At the time this report is published, import HDPE film has reached $1325 – 1370/ton and LLDPE film at $1160 – 1220/ton, CIF SEA, LC AS. “Customers are not accepting the latest prices. We received a high number of bids at $1140/ton for LLDPE film and $1300/ton for HDPE film, Saudi Arabia origin. We are waiting for the principal supplier to revert on the final prices,” an international distributor informed.