Asia Daily PP and PE Overview 11 May 2018

CHINA

• Buyers display strong resistance to both import and local prices
• Market participants expect minor price correction in the near term

Polypropylene (PP)

Trading activities in the domestic ground are weaning. China market remains irresponsive to the firming development in the global energy complex that has been supporting the sentiment in other markets in the region. Spot offers for homo-PP in Eastern China drop another CNY50/ton ($8/ton) today and yet, deals conclude are not strong as supplier hope it would be. “Besides the price cut, we are open to negotiation, however, our customers are just too conservative,” a trader said.

Many PP buyers in the packaging sector are complaining about the softer demand for end products while bank credit remains tight. “Prices are too high now and we have comfortable on-hand inventories. We are waiting on the sideline and would the offer drop further, we might proceed with additional replenishment,” a converter receives offers for Indian and Saudi Arabia cargoes at $1240-1250/ton CFR China said.

Polyethylene (PE)

Except for a good number of deals for Qatari LLDPE film reported at $1190/ton CFR China, LC AS term, other suppliers are not satisfied with the sales results toward the weekend. Major Thailand maker lifted import PE offers to China earlier this week is now expecting a minor price correction in the near term. “We only managed to close a small of deal at the latest offers. Import HDPE has touched the previous high levels and triggered huge resistance from buyers. We do not expect any further increases in the coming week,” a source close to the producer said. 

Players are reporting deals for mainstream Saudi cargoes have been achieved at $1200/ton levels - $20-30/ton below initial price list after intense negotiation. “We are willing to sell Indian LLDPE film below $1200/ton mark, however, received very limited bids. We might have to wait until next week before introducing any adjustment,” a trader said.   

SOUTHEAST ASIA 

• Limited new offers on the final trading day of the week 
• Overseas sellers hold firm on offers as Indonesian buyers returning to import market

Polypropylene (PP)

Import offers are rather limited on the final trading day of the week and a major Saudi Arabia producer that lifted homo-PP prices to Vietnam in the previous day to $1290/ton CIF term has announced the same price level to Indonesia. With BMTPD renewed, a number of Indonesian buyers are placing bids at $1270/ton for the cargoes though it appears that buyers here are very cautious about accepting higher levels.

“We could obtain domestic cargoes at $1300/ton without VAT, FD Indonesia cash term and therefore, we have no plan to lift our bid for deep-seas materials,” a buyer said.

Meanwhile, the producer refused any discount to Vietnam market to insist deal at the offered level claiming the lack of quantity. “Converters might proceed with small purchases as supply for this grade in the local ground is very tight. For us, we decided to procure some Indonesian homo-PP cargoes at $1290/ton CIF Vietnam, which is duties free,” a trader said. 

Polyethylene (PE)

A similar situation is observed in the regional PE market and the tug of war between soft demand and strong upstream costs is getting intense. “Local HDPE market has firmed up following the strong energy complex and the firmer import offers, however, deals have been disappointed. With the overseas market, especially China, started showing resistance toward higher prices, we become less confident in the near-term outlook given that demand here might continue to weaken due to summer break,” a Vietnamese trader commented.

Malaysian market has been going through a rocky week due to the General Election. Businesses in the country are now taking a very cautious stance while watching out for the new policies the elected government might implement. “At the moment, the outlook might be positive with the removal of the goods and service tax (GST). Meanwhile, we prefer to take a conservative stance as the fasting month will start next week,” a market source said.