Asia Daily PP and PE Overview 18 April 2018

CHINA

• Sentiment remains calm even after PBOC’s latest financial scheme
• Further increases in import PE face stiff resistance 

Polypropylene (PP)

Total PP and PE inventories at Sinopec and CNPC warehouses fell 15,000 tons from the previous day to approximate 825,000 tons. The market is calm and in spite of the latest announcement from the People’s Bank of China pertaining the plan to cut reserve-requirement ratio for commercial banks, which ultimately help ease conditions for businesses and individuals, buyers are mostly adopting a wait and see stance. 

“It appears that buyers have stocked up comfortable stock, and therefore in no rush to make new purchases. Compared to the same period last year, many of our customers are suffering from lower end product demand, and looking ahead, this is very concerning us,” a trader said.   

Polyethylene (PE)

Local trader continues to cut spot HDPE and LDPE film prices by CNY50-100/ton ($8-16/ton) from the previous trading day in an attempt to stimulate buying interest. The development has pressured import market to a certain extent. Major Thailand producer lifted weekly PE offers to China by $10-20/ton, and distributors are not optimistic about the sales result for this week amid strong resistance from buyer side. “Prices have returned to the previous highs while local market is softening. Buyers would naturally source competitive materials from domestic suppliers,” a source said.

SOUTHEAST ASIA 

• More competitive non-dutiable homo-PP cargoes show up in Vietnam 
• Attempt to lift import PE prices might require more effort 

Polypropylene (PP)

As expected, a major Saudi Arabia producer conceded to $15/ton discount from the initial offers levels to conclude deals at $1255/ton CIF Vietnam, LC AS term. Very few customers actually engaged in the transaction given the fact that many have stocked up comfortable inventories. In the meantime, more non-dutiable homo-PP cargoes show up in Vietnam at the level $1270/ton, and yet very limited activities observed, “These cargoes for June shipment, which means we might only receive the material in July and it is a little too far. We did not place any bid,” a buyer commented.

A couple of international traders confirmed the market condition with a source said, “Except for the particular Saudi cargoes, most other origins are facing difficulty to attract deals, including re-export Indian homo-PP from China. Further increases might bump into serious resistance.” 

Polyethylene (PE)

The import PE market remains largely stable after several suppliers attempted to implement moderate hike on the new offers in the previous trading day. “We have not received any bids so far. Customers are very reluctant and this could be the biggest hurdle for us to introduce additional increases,” an international trader said.

Despite a clear sign that demand in Southeast Asia is not in the right state to support any price hike, overseas suppliers have shown little hesitation in lifting offers due to lower sales pressure after achieving good deals in the nearby China market over the past two weeks. “We have oversold metallocene PE by 200% to China, which leads to tremendous upward pressure in Southeast Asia market. We are monitoring further development before introducing new prices in the coming week,” a regional producer informed.