Asia Daily PP and PE Overview 10 May 2018

CHINA

• Slower trading activities as buyers resist higher prices
• LDPE film market hold a weak position

Polypropylene (PP)

Local buyers remain very cautious about making fresh purchases in spite of the discounts that traders brought to the market with an aim to stimulate the sentiment. Spot homo-PP traded in Eastern China in the range CNY9200-9300/ton ($1245-1259/ton without VAT), EXW China, cash equivalent, which is CNY50/ton ($8/ton) lower day on day.

In the import ground, most suppliers are attempting to implement moderate hike on the latest price list citing the lack of sales pressure. After showing strong resistance, buyers switch to grasp cargoes from a major Saudi Arabia producer at $1210-1220/ton CFR China term. “Offers above the $1250/ton threshold are technically more expensive than domestic materials. It is getting clearer that buyers would only source certain grades from import market and therefore, overseas sellers are showing less interest in China these days,” a market source added.  

Polyethylene (PE)

The LDPE film market shows no sign of any strong improvement though Iranian cargoes, including those selling based on formula prices, are not frequent the market in recent weeks. The price gap between LLDPE and LDPE film is now getting narrow and players hope that an increase in LDPE proportion in end product manufacturing process would support the sentiment.

Chinese players reported receiving offers for a number of re-export HDPE film cargoes for various origins such as Saudi Arabia, Thailand and Nigeria in the range 1360-1410/ton CFR China from Vietnam. “These prices are too high and we might ask for some discount before entering any real deal,” a buyer said.

SOUTHEAST ASIA 

• Firmer import homo-PP faces strong resistance from buyers
• Stronger demand for HDPE in China attract re-export cargoes from Vietnam

Polypropylene (PP)

A major Saudi Arabia producer introduces $20/ton hike on the latest import homo-PP offers to Vietnam, bringing the price list to $1290/ton CIF Vietnam, LC AS term. Despite the limited quantity available, market respond is not matching the supplier’s expectation and bids have been coming in at $1270/ton with the same term. “Our supplier informed that the allocated quantity is fully booked and are unable to accept additional inquiries. This grade is rather tight in the local market at the moment, however, we think the condition might be eased in June as previously purchased cargoes arrive the market,” a buyer said.

Many Vietnamese buyers are cautious about making an additional buy at the current high price levels citing the risk that another local producer – Nghi Son Petrochemical might start offering commercial cargoes by end of this month, which would dampen the sentiment.  

Polyethylene (PE)

As import HDPE to China returns to the previous high levels, several traders in Vietnam decided to divert on hand cargoes to that market to gain better profit margins. “Vietnam market might need more time to accept higher import offers as local demand remains soft. Many converters, whose products are sold mainly in the domestic ground, are facing thin profit margin amid traditional low demand season,” an international trader diverted Saudi HDPE film to China said.

Meanwhile, several HDPE bag makers claimed to have good sales results to Europe, and yet, the need to make replenishment is rather minimal amid comfortable on hand inventories. There is strong belief that with Muslim markets entering the Ramadan season, demand in these market might be affected to a certain extent, which might limit the upside of the current firming trend.