Asia Daily PP and PE Overview 4 May 2018

CHINA

• Domestic market remains firm with support from macro environment and low stock pressure
• Deals for import PE cargoes from the USA are strong despite concern over trade tension 

Polypropylene (PP)

Sentiment in the domestic ground is rather calm on the final trading day of the week, as buyers are resisting the continuous firming trend that has been in place over the past several weeks. However, local suppliers are showing little intention to introduce any price cut in the near term considering the lack of inventories pressure. Total PP and PE stock at Sinopec and CNPC’s warehouses fell another 15,000 tons day on day to approximate 795,000 tons as of 4 May 2018, which are pretty low for the long Labour Day holidays.

Import market has little movement. Except for some specialty transparent PP grades that have reached the $1400/ton threshold; Saudi and Indian homo-PP yarn cargoes are mostly at the level $1220/ton CFR China, LC 0-60 days term.

Polyethylene  

In an interesting development, the market is very active in purchasing import USA PE cargoes, mostly HDPE grades over these two trading days in spite of heavy concern over the escalating trade tension between China and the USA. Deals concluded for HDPE film are in the range $1320-1350/ton, blow moulding at $1315-1320/ton and injection at $1200-1220/ton, all based on CFR China, LC 60 days term for June and July shipment.

“We sold more about 10,000 tons of the USA HDPE cargoes, mostly to more buyers in small quantity. Customers have no choice as other origins are either priced at higher levels or lacking volume. The Chinese and USA governments started to discuss solutions for the current trade tension and we hope for a positive outcome,” an international trader said.     

SOUTHEAST ASIA 

• Firmer import PE faces resistance, Saudi major stepped back on new prices 
• Regional PP market trap in stable condition 

Polypropylene (PP)

Overseas suppliers, especially those from the Middle East, are not very active in giving new offers on the final trading day of the week claiming better sales result to other markets. In the meantime, non-dutiable cargoes from Thailand and China continue to emerge in Vietnam at relatively competitive levels, which limit the upside of the market. “We are bidding Thailand cargoes at $1270/ton to purchase some quantity and currently waiting for feedback. In the meantime, Saudi homo-PP is firm at $1260/ton, which we feel a little too high,” a Vietnamese buyer commented.

Meanwhile, in local Indonesia, the homo-PP yarn market persists on a bearish note and in spite of higher prices list; major suppliers in the country are forward selling cargoes for June and July delivery at IDR18,100,000/ton ($1298/ton) without VAT, FD Indonesia, cash equivalent. “We are asking for IDR400,000/ton ($29/ton) discount on deals, however, our suppliers rejected. Such activities signal the lack of confidence amongst sellers for the medium term outlook,” a buyer added.

Polyethylene (PE)

Major Saudi Arabia producer decided to step back on the May shipment offers to Vietnam by $20/ton for both HDPE and LLDPE film cargoes compared to earlier this week after bumped into stiff resistance. Vietnamese buyers are yet to show any eager to make replenishment with some claimed that additional discount of another $20/ton must be given in order to entice purchasing activities. “The rapid price adjustment is scaring buyers away, whose confidence has already been affected by the constant falling ethylene costs. We prefer to adopt wait and see stance for now,” a market source said. 

The supply shortage for LLDPE and HDPE film in local Indonesia has yet to translate into better demand for import cargoes, though many sellers hope that the renewal of the Import duty borne by government scheme (BMDTP) is coming to completion would have a positive impact on the near-term sentiment.