Asia Daily PP and PE Overview 18 May 2018

CHINA

• Domestic market continues to soften
• Import market is stagnant with limited transaction observed

Polypropylene (PP)

Trading activities in domestic spot market hold soft though traders are offering up to CNY100/ton ($16/ton) discount on both PP and PE cargoes with hope to attract purchasing interest. “We might have to offer an additional discount in the coming day if buyers remain reluctant to discuss deals. Buyers only procure small quantity at the lower end of the overall price range,” a trader informed. 

Total PP and PE inventories at Sinopec and CNPC warehouses fell 10,000 tons from the previous trading day to approximate 750,000 tons as of 18 May 2018. At the time this report is published, spot homo-PP in Eastern China is traded at CNY9150-9250/ton ($1230-1243/ton without VAT).

Polyethylene (PE)

The PE market is calm. Despite the tight supply condition, import HDPE film priced above the $1400/ton threshold faces tremendous difficulty in attracting purchases. “We have not made any purchases at the new price level. The market generally believed that the HDPE market has reached the cyclical peak and less likely to advance any further, which also mean a correction is possible. It is too risky to procure cargoes now,” a trader informed.

The strong appetite for LLDPE film cargoes observed earlier this week is now fading as players concern over the medium term outlook for this grade. “We are a bit concern about LLDPE film as a number of import cargoes are arriving on the market, easing the supply concern,” a source said. Indian LLDPE film is offered at $1190/ton CFR China, LC AS term and no deals have been reported at the time this report is published.

SOUTHEAST ASIA 

• Limited import homo-PP offers, firming trend might persist 
• Regional producer started offering June shipment PE

Polypropylene (PP)

The import homo-PP market is rather quiet on the final trading day of the week with very limited offers available. In spite of the strong resistance to the current prices, couples of buyers started feeling the urge to make emergency replenishment fearing that prices might remain on the stable to firmer track throughout June. “Several suppliers have informed about the plan to lift offers in the coming week while Chinese speculators appear to have more confidence in the PP market, making it more certain that prices are not going down anytime so soon. We might purchase a small quantity today,” a Vietnamese converter said. Sources fear that dutiable cargoes might hit the $1330-1350/ton CIF Southeast Asia in the next price announcement. 

In Indonesia, the market remains stagnant though, in a good sign, local traders started hold firm on the homo-PP yarn cargoes at IDR18,800,000/ton ($1328/ton) without VAT, FD Indonesia, cash equivalent. The bigger issue that Indonesian players are facing at the moment is the arrangement of delivery, as many logistic companies would take off for Ramadan holiday by the second week of June.   

Polyethylene (PE)

A major Malaysian producer maintains LDPE film offers to Vietnam unchanged from last month at $1320/ton CIF, LC AS term while no HDPE allocation available. A couple of deals has been realised at a moderate discount; however, most buyers are very conservative about replenishment. A buyer purchased the cargoes at $1300/ton CIF Vietnam, LC AS term said, “We have to reduce the quantity due to the uncompetitive price level. Other cargoes, including from Thailand and the Middle East are available at $70-80/ton lower.”

Other suppliers might open June shipment offers in the coming week and players are looking at moderate hike for HDPE cargoes. “We are still not very confident in the LLDPE and LDPE film market. At the moment, we are on the wait and see mood,” a regional buyer added.