Asia Daily PP and PE Overview 15 May 2018

CHINA

• Weak futures trading hurt spot trading activities 
• Import market remain firm despite strong resistance

Polypropylene (PP)

Total PP and PE inventories at Sinopec and CNPC warehouses fell 35,000 tons from the previous trading day to approximate 785,000 tons as of 15 May 2018. However, purchasing interest remains pretty soft, from which traders started offering up to CNY100/ton ($16/ton) discount on spot homo-PP cargoes in Eastern China to entice demand. “Converters only purchase hand to mouth, even BOPP buyers, as it is the traditional low demand season. Producers might face pressure to deplete inventories before the month end, and therefore, we expect more discounts to emerge in the near term,” a trader said.

There are very limited offers in the import market though mainstream cargoes linger at the range $1250-1260/ton CFR China, LC AS term. It appears that Chinese buyers continue placing more attention on domestic materials, leading overseas sellers to lose interest in the market.

Polyethylene (PE)

Import PE to China persists on the stable to firmer track though buyers started developing stiff resistance. HDPE availability is tight, which pushes prices higher and this condition might sustain the coming weeks, sources said. Deals for prompt Saudi Arabia are concluded at $1390/ton for HDPE film and $1230/ton for LLDPE film, CFR China term with a trader said, “We have sold out all available quantity for May delivery. We might only announce new offers by end of this month and therefore, having strong expectation that market would remain firm.” 

In the meantime, Thailand HDPE film has reached $1450/ton CFR China with no immediate deal reported. “These cargoes are way above market acceptance. Some discounts must be made available to draw buyers back. We think this marks the ceiling price for this cycle,” a distributor commented.   

SOUTHEAST ASIA 

• Indonesian buyers turn to import market as BMDTP renewed 
• Vietnamese buyers resist higher prices, causing heavy sentiment  

Polypropylene (PP)

After receiving higher import homo-PP in the previous day, Vietnamese buyers are mostly on the wait and see stance, fearing that prices might be nearing the peak while thin profit margin prevents strong buying interest. “Both non-dutiable and dutiable cargoes are firming up, however, only converters are procuring hand-to-mouth basis as traders are not making any profit at the current market levels. The local ground might face pressure once Nghi Son Petrochemical introduces commercial cargoes, from which we prefer to take a cautious stance,” a market source said.

In the meantime, Indonesian buyers are returning to import market to procure Middle Eastern cargoes after the BMDTP scheme renewed. Deals for Saudi Arabia homo-PP are reported at $1285/ton CIF Indonesia, LC AS term – a $5/ton reduction from the initial price list. “We hope the recent political instability would be under control soon. Looking ahead, we do have positive expectation regarding the demand condition in Indonesia,” an international trader said.

Polyethylene (PE)

Thanks to the renewed tight supply condition for HDPE film and improved purchasing interest for this grade in the nearby China market, import HDPE to Southeast Asia are gaining ground. Prices below the $1350/ton threshold have not repeated at the time this report is published, and yet, buyers are not showing strong interest in making replenishment. “We are collecting bids at $1360/ton for HDPE film cargoes, however, best counter-bid we received is at $1340/ton. The market is very slow and we started to feel the pressure,” an international trader offer Kuwait HDPE film at $1380/ton CIF Vietnam reported.

In contrast, LLDPE film priced at $1180/ton is moving much smoother compared to the previous weeks. “We have sold out our cargoes at this price to Vietnam” a trader informed. Meanwhile, as expected, Indonesian buyers are turning to import market for LLDPE film after getting BMDTP renewed. “This could ease the supply shortage in the local ground in the coming month,” a buyer happily said.