Asia Daily PP and PE Overview 17 May 2018

CHINA

• Local market remains soft as traders attempt to stimulate trading activities 
• No major quantity for USA cargoes is expected in the near-term

Polypropylene (PP)

As futures market extended the weakening trend, sentiment in the domestic spot market shows little improvement in term of trading activities. Local traders continue offering CNY50/ton ($8/ton) discount on both PP and PE cargoes with hope to stimulate trading activities, which apparently yield little result at the moment. 

However, players are betting heavily on PP market following the strong foothold of PP contract on Dalian Commodity Exchange. “The price gap between September delivery contract for PP and LLDPE on futures market is now less than CNY150/ton ($24/ton) favouring PP grade, showing a healthy confidence level among investors. LLDPE film market might be under pressure in the coming month as import cargoes arrive to ease the current tightness,” a market source commented.

Polyethylene (PE)

Couples of traders returned from a site visit in the USA to conclude that no substantial cargoes from this origin would show up in Asia in the near term, as most producers here are focusing on the local market at the moment. “However, more quantity would be allocated for export in the medium term as the summer holiday draws near,” a source said, adding that most of the newly started up plant here are producing HDPE grades.   

SOUTHEAST ASIA 

• Limited purchasing interest though June shipment offers likely to move higher
• Indonesia market faces difficulties in arranging delivery ahead of Ramadan 

Polypropylene (PP)

There are very limited offers observed across the region and it becomes clearer that Southeast Asian market is entering a stagnant stage. Import offers above the $1300/ton threshold have not attracted good purchasing interest, even among Indonesian buyers, who just have BMDTP renewed. “We have not received any good respond for non-dutiable homo-PP cargoes, from which we have diverted the quantity to Vietnam market,” an international trader selling Philippines cargoes to Indonesia said. Other suppliers for Thailand and Vietnamese homo-PP are reporting similar situation for prices $1330-1350/ton CIF Indonesia, LC AS term.

Vietnamese buyers are showing little respond towards the movement in the import ground though overseas sellers have repeatedly emphasized on the intention to implement further increases in the coming weeks. “We just can’t accept the current market levels anymore. Locally held Thailand homo-PP yarn cargoes are available at VND32,900,000/ton ($1313/ton without VAT), FD Vietnam, cash equivalent, which gives no sense to the existing import offers," a converter commented.

Polyethylene (PE)

June shipment offers are expected to surface in the coming week and players are looking at stable to firmer levels compared to May in spite of the drop in upstream ethylene costs. “Some of our customers have accepted Kuwait LLDPE film at $1190/ton CIF Vietnam term this week, which was strongly resisted before. This is a good sign thanks to the resilient energy complex and tightening supply condition. We are looking at an opportunity to implement a small increase in the near term,” an international trader said.

While most PE suppliers have every intention to keep new offers on the stable to firmer trend, it remains questionable if demand would support such move.