Asia Daily PP and PE Overview 24 May 2018

CHINA

• Constant falling local market started casting effect on import ground
• Near-term outlook remains weak

Polypropylene (PP)

The inability of the futures market to recover from the recent downtrend has continued weighing down the spot ground. Buyers are postponing purchases with hope to achieve larger discount in the coming day, leading to slower inventories digestion rate at supplier’s side. In fact, total PP and PE stocks at Sinopec and CNPC’s warehoused reduced only 3,000 tons from the previous trading day to approximate 725,000 tons as of 24 May 2018. Spot offers for homo-PP fell another CNY50/ton ($8/ton) to CNY9100-9200/ton ($1217-1231/ton without VAT), EXW China, cash equivalent.

In the import market, international suppliers are taking a softer stance on the cargoes compared to earlier this week and deals for Indian homo-PP cargoes have reached $1240/ton CFR China, LC 60 days term for July shipment. 

Polyethylene (PE)

Import PE to China has inched $20/ton lower on an average and the downward pressure from the local ground is there to blame. Saudi HDPE film that was transacted at $1420/ton on the first trading day of the week, is now dealt at $1390/ton CFR China, LC AS term. Meanwhile, Saudi LLDPE film that was sold at $1220/ton in the previous week, is now at $1190/ton with the same term.

Chinese traders are not wiping the bullish expectation on HDPE market away, instead, holding strong hope that the lack of Iranian and USA cargoes would keep the prices at the high $1300/ton in the coming weeks. 

SOUTHEAST ASIA

• More producer announced June shipment offers with increases 
• Regional market enters a stagnant stage 

Polypropylene (PP)

There has not been any major movement in the regional PP market and buyers remain reluctant to accept the recent increases. With China market started facing some corrections, Southeast Asian players believed that market is at its peak. “Prices might not drop too sharply, however, there is no more room for further hike. We are waiting for price adjustment,” a buyer received offer for Saudi Arabia cargoes at $1300/ton said.

In the meantime, Indonesian customer refused to accept dutiable cargoes above the $1285/ton CIF mark even with BMDTP renewed. “Anything above this level would no longer be competitive as domestic suppliers are offering very attractive prices. Most Indonesian buyers are entering the holiday mood, which might cap overseas producers’ ability to implement additional hike in the near term,” an Indonesian buyer added. 

Polyethylene (PE)

Another Saudi Arabia maker lifted June shipment offers to Southeast Asia by $30/ton for HDPE film to $1410/ton and $20/ton for LLDPE film to $1220/ton, CIF, LC AS term. Bullish China market is the primary support for the price decision; however, the maker does not expect any immediate deals, as regional buyers are more conservative. “We are collecting bids and would decide the final prices in the next few days. We have positive expectation on China market, and therefore, Southeast Asia shall pick up too,” a source close to the producer informed. 

It is important to note that very few buyers in the region could accept Middle Eastern HDPE film at or above the $1400/ton mark and that deals at $1370-1380/ton reported in the previous session are not strong, too.