Asia Daily PP and PE Overview 30 May 2018

CHINA

• Local traders open to negotiation with serious buyers 
• More overseas suppliers step back on import LLDPE film offers 

Polypropylene (PP)

Trading activities in the domestic spot market have not shown any major improvement, especially with Dalian Commodity Exchange faces difficulties to make a breakthrough. Putting the effort to increase prices aside; local traders are even unable to main offers stable throughout the week. “Customers are negotiating very hard and sales are not strong. We started offering export cargoes again these days,” a trader informed, adding that export offers for regular homo-PP are available at $1300/ton FOB China.

The sluggish condition in the domestic ground has clearly shied overseas sellers away. A limited quantity of Saudi Arabia and Russian homo-PP showed up in China toward the end of the week at $1240/ton CFR, LC AS term, which is much lower than other markets. Such unhealthy margins might continue keeping import cargoes at bay in the near term.

Polyethylene (PE)

As expected, a major Thailand maker has stepped back on LLDPE and LDPE film offers to China by $40/ton and $20/ton respectively thanks to the constant falling local prices throughout the past week. In the meantime, Indian LLDPE film is now traded at $1140/ton CFR China term, yet transactions are thin. “The LLDPE film market is set to remain in the stable to softer trend in the coming weeks amid the off-peak season. We are hoping to see the demand to come back in July as a preparation for the new agricultural season,” a market source said.

SOUTHEAST ASIA 

• Mixed acceptance on latest LLDPE film hike across the region 
• Import homo-PP remains firm despite sluggish demand condition 

Polypropylene (PP)

Middle Eastern suppliers maintain a very firm stance on the import homo-PP offers to Southeast Asia, from which prices below the $1300/ton threshold are gradually disappearing. A Saudi maker has set final offers for yarn grade to Indonesia at $1325/ton CIF; LC AS term citing limited availability despite the rigid reluctance buyers here portray. 

“As an international supplier, we have been very disappointed with the state of demand for import cargoes over the past several days. Even with BMTDP renewed, the buying interest has not improved immediately,” a trader offers Kuwait homo-PP at $1310/ton to Indonesia commented.

Vietnamese buyers, especially local traders have not actively made large replenishment for several weeks in a row due to high costs and weak demand, which lead to another risk that domestic ground would face a serious shortage in the medium term as the country depends heavily on import. “We could accept deep-seas cargoes at $1300/ton CIF, LC AS term if we are certain about the start-up schedule at Nghi Son Refinery and Petrochemical. The new capacity comes online might disrupt the current market equilibrium and exposing traders to huge price risk. We prefer to protect our profit margins,” a trader said. 

Polyethylene (PE)

The latest increases on LLDPE film cargoes for June shipment are receiving mixed acceptance among buyers across Southeast Asia. While several deals for Middle Eastern cargoes have been materialised at $1190/ton CIF Indonesia, LC AS term, Vietnamese buyers only placed bids at $1170/ton. A diverse local market condition is one of the main factors driving such differences. 

In fact, local Indonesia market has been battling a shortage of supply for months and as per expected, buyers turned to import market once BMTDP renewed. In contrast, local Vietnam market is having healthy supply amid the traditional slow season. “It is less likely that Vietnamese buyers could accept the same levels though we are attempting to lift bid prices at the moment,” an international trader added.