Asia Daily PP and PE Overview 21 May 2018

CHINA

• Domestic PP market strengthened compared to LLDPE film 
• Import PE might continue to tighten due to the lack of USA and Iranian cargoes

Polypropylene (PP)

Chinese players are placing more bullish bet on the PP market, which evidently reflected on the Dalian Commodity Exchange. The premium that September delivery contract for LLDPE has over PP is now narrowed to only CNY87/ton ($14/ton) from the usual gap of about CNY300/ton ($47/ton), signalling the loss of interest among speculator on LLDPE. 

There are very limited offers for import cargoes from mainstream origins though deals for Middle Eastern homo-PP have been achieved at $1260/ton CFR China, LC AS term for July shipment. “Supply is very tight and therefore, the market would remain firm in the near to medium term,” a trader said.     

Polyethylene (PE)

While players are loosing confidence in the LLDPE film sector given the end of the agricultural film season and healthy supply, the HDPE market continues to advance. It is reported that Saudi Arabia HDPE film has been transacted at $1420/ton CFR China today – a $30/ton hike from last week, underlining the robust appetite among buyers.

Supply from the USA might take some time to arrive the market as reported earlier, while Iranian cargoes might witness a reduction in the coming months due to the heavy turnaround schedule among PE producers here. “And therefore, we are planning to implement another $10/ton increased on HDPE cargoes in the next price announcement. Our sell idea is at $1450-1460/ton for film and yarn grade,” a Thailand producer added.

SOUTHEAST ASIA 

• Overseas suppliers started opening June shipment offers 
• Weak appetite for PE might encourage sellers to divert cargoes to China 

Polypropylene (PP)

Overseas suppliers are still not very active in giving new offers to the region, however, it is clear that market is on an upswing. “We plan to introduce $30/ton hike on homo-PP cargoes for June shipment amid limited quantity and healthy demand from other markets. Southeast Asian buyers might have no other choices but to gradually accept the new price levels,” a Saudi Arabia producer informed.  

Polyethylene (PE)

Major Saudi Arabia maker lifted PE offers to Indonesia and Vietnam to $1210-1220/ton for LLDPE film and $1390/ton for HDPE film, all based on CIF, LC AS term. “We plan to place bids at $1170-1180/ton for LLDPE film cargoes first while waiting until next day to place bids for HDPE. The local market is a bit soft and with the government’s latest plan to lift the environmental tax on plastic bags, sales would likely to remain low in the near term,” a buyer informed.  

In Vietnam, import HDPE film priced above the $1350/ton threshold has not been able to grasp much buying attention as the domestic ground remains sluggish amid the traditional slow demand season. “Several major traders here have been actively re-export cargoes to China, where demand and margins are much better,” a local source added.

“We might direct more PE quantity to China this month in profit taking. Supply is generally not comfortable and we expect this condition to persist in the coming weeks. Yet, Southeast Asia buyers are somehow, not responding to this development,” a Middle Eastern producer commented.