Asia Daily PP and PE Overview 7 May 2018

CHINA

• Local and import markets inch higher 
• Market resistance started to get stronger as converters faced squeezed margins

Polypropylene (PP)

Buyers started to limit the purchased quantity as domestic suppliers once again implemented CNY50-100/ton ($8-16/ton) increased on domestic spot cargoes. A number of buyers are complaining about thinning end product profit margins amid continuous rising raw material prices in the recent weeks, “However, supply remains tight in both local and import ground, which supports higher prices. Many domestic PP plants are still under maintenance shutdown, and therefore, it is less likely that suppliers would cut offers in the near term,” a trader said.

In the import market, offers for Indian and Saudi cargoes gained $10-20/ton from the previous trading days to $1230-1240/ton CFR China, LC 0-60 days term. Transactions are thin, though it also appears that overseas sellers are not putting heavy interest in China given better profit margins achieved in other markets.

Polyethylene (PE)

Regular HDPE cargoes originated from Asia and the Middle East also gained ground on the first trading day of the week. In fact, prices below the $1370/ton mark have not repeated yet, signalling a possibility that market started to inch higher on the back of tightened availability. “HDPE yarn is particularly limited. Most of our cargoes will only arrive by end of this month and we hope market would ease a little by then,” a converter purchased Indian cargoes at $1380/ton said.

SOUTHEAST ASIA 

• Import homo-PP gains ground on tight supply, strong upstream costs
• Purchasing interest for import PE remains weak though local Indonesia is strong

Polypropylene (PP)

There are only couple of international suppliers open new offers on the first trading day of the week though prices are firming up following the recent surge in the energy complex while Middle Eastern cargoes remain limited. Duties free cargoes from Thailand emerged in Vietnam at $25/ton increased from last week to $1315/ton CIF, LC AS term with deals expected to reach $1300/ton level.

A trader said, “Market is very slow and only converters with the urgent need for material make purchases. Prices have increased slightly and might hold steady on this track throughout May thanks to limited Saudi cargoes. However, if demand does not pick up, the upside of the market would be narrowed.” 

A couple of small deals for Omani homo-PP yarn have been reported at $1270/ton CIF Vietnam, LC AS. “And as a result, we di not open new offers to any other market in the region, including China, as prices might inch higher in the near term,” an international trader said. 

Polyethylene (PE)

Local PE market in Indonesia continues to firm up as supply shortage is expected to persist in the coming weeks. Local traders are attempting to offer LLDPE film based on FD Indonesia, cash equivalent at about $1410/ton without VAT – which is about $30-35/ton higher than producer’s price list. International suppliers are monitoring closely the development in Indonesia market as buyers here might soon switch to import market to fulfil quantity requirement.

In contrast, demand for PE in Vietnam is rather sluggish and even after the price cut introduced in the previous week, a major Saudi Arabia maker finds it hard to smoothen sales process here. “We are still watching out for market movement before opening new offers. We hope that the combined effect of resilient energy values and stronger China market would support Southeast Asia region,” an international trader commented.