Asia Daily PP and PE Overview 16 May 2018

CHINA

• Domestic PP and PE market faces minor adjustment
• Import market hold firm with further drop in supply ahead

Polypropylene (PP)

Total PP and PE inventories at Sinopec and CNPC warehouses pile up slightly from the previous trading days due to waning demand condition. To stimulate purchasing interest, traders are offering another CNY50-100/ton ($8-16/ton) discounts on both spot PP and PE cargoes, and yet the number of deals reported is rather disappointing.

“Market is adjusting, however, it does not seem like suppliers are in rush to cut prices and that might underline our expectation that no major correction would take place in the near term. Supply remains tight due to the heavy maintenance shutdown schedule, which plays an important role in supporting the near-term outlook,” a trader informed. 

Polyethylene (PE)

Supply for PE in the coming weeks might continue to decline, Chinese buyers said, given that a Thailand producer is facing a major production issue at its LLDPE line, which could only resume regular run rate by June. “As a result, most of the May shipment cargoes for LLDPE film from the supplier would have to postpone for a month. We are a bit concern over the near-term outlook,” a distributor informed.

Chinese players are also complaining about the lack of Iranian cargoes for both spot and contract market. “This is because of the persistent lack of feedstock in Iran, leading to lower production rate. Besides, two major producers here are performing annual turn-around in the coming month which might deprive the supply even further,” a trader said.   

SOUTHEAST ASIA 

• Quiet sentiment as players await June shipment offers 
• Vietnamese buyers believed import homo-PP might be nearing the peak 

Polypropylene (PP)

Import homo-PP to Southeast Asia has been constantly firming up since late March as overseas suppliers, especially from Middle Eastern, divert attention to other markets for better profit margins. Data from CommoPlast showed that the average import homo-PP prices to Vietnam surged approximately $70/ton over a period of seven weeks, though buyers started resisting the current market level, indicating a possibility that prices might be nearing the peak.

“Our Saudi Arabia supplier insists to sell the homo-PP yarn cargoes at the level $1300/ton CIF Vietnam, LC AS term, which we found too high while other sellers are not having quantity. Local traders have totally suspended all purchases at the current levels and for us, we might postpone replenishment until early June,” a converter informed.

Polyethylene (PE)

There are very limited new offers for PE observed in Southeast Asia as players are waiting patiently for the new price announcement. It is widely expected that HDPE prices might hold firm in the near term given the lack of availability, however, any drastic increases certainly bump into resistance. “We lifted HDPE blow moulding offers by $25/ton to $1415/ton to Vietnam and receive not one single bid this week. The whole market is hibernated, which very likely to cap the upside of the market,” a Thailand producer informed. 

Meanwhile, local suppliers in Indonesia remain optimistic about the near-term market outlook despite the recent political instability and the start of the fasting month, which take place on 17 May 2018. “We think buyers would still need to make replenishment after the Ramadan as the recent restocking is not enough to cover long production. As a result, we prefer to hold firm on prices for now,” a local trader said.