Asia Daily PP and PE Overview 31 May 2018

CHINA

• Trading activities in local ground remain sluggish 
• Import market unchanged, no sign of adjustment on HDPE prices 

Polypropylene (PP)

The recent development on Dalian Commodity Exchange hathe s had local players very concern about the near-term market outlook. September delivery contract for LLDPE constantly going down over the past week, and at the moment, traded on the same par with PP contract, underlining the weakness for this grade. Industry participants are expecting a correction to take place to bring market back to the normal state.

“Players are slowing down to a certain extent to gauge the near term market trend before mthe aking decision. Sales are slow though sellers are open to negotiation,” a trader said, adding that total PP and PE inventories at Sinopec and CNPC warehouses are unchanged from the previous trading day at 720,000 tons as of 31 May 2018.

There are very limited new offers for import homo-PP to China as overseas sellers find this market less attractive than others. “We have sold Omani homo-PP yarn at $1310/ton to Vietnam and therefore, left no allocation to China. Southeast Asia market is fetching better margins at the moment,” an international supplier informed.

Polyethylene (PE)

The LDPE film market remains the weakest among all polyethylene grades, as supply is the most comfortable. In the meantime, suppliers are holding HDPE prices very firm regardless of the demand condition. At the time this report is publish, import HDPE film to China is reported at the range $1360-1450/ton CFR, LC 0 – 90 days term, up $10/ton week on week on an average. There is no sign that sellers would adjust prices lower in the coming days given the lack of USA and Iranian cargoes. 

SOUTHEAST ASIA 

• Import offers for dutiable homo-PP continue to inch higher 
• Regional buyers remain cautious about PE market 

Polypropylene (PP)

Major Saudi Arabia producer implemented $20/ton hike on import homo-PP to Southeast Asia market, lifting the latest offers to $1310/ton CIF Indonesia and $1320/ton CIF Vietnam. Limited availability remains the primary driver steering the up-trend, though transactions at the new price levels are rather thin. 

In Vietnam, there have been reports that only converters with appointed grade would proceed with purchases for this material, while local traders are showing little interest citing the concern over a possibility that local market would be hampered once Nghi Son Refinery and Petrochemical start offering commercial cargoes. 

In Indonesia, domestic suppliers are holding firmer stance on the PP cargoes, following the recent development in the import ground, and yet, buyers here are very conservative about rushing into deal. “We only buy based on need basis. Demand outlook in the post – Ramadan term remains cloudy and with the recent drop in energy value, being cautious is preferable,” an Indonesian buyer reported receiving IDR400,000/ton ($29/ton) hike for yarn grade from a local trader to IDR19,200,000 ($1382/ton) without VAT, FD Indonesia, cash term. 

Polyethylene (PE)

Indonesian buyers after accepted Middle Eastern LLDPE film $1190/ton CIF, LC AS term earlier this week have now decided to withdraw to the sideline. Market sources here are monitoring closely the movement in the local ground claiming that traders appear to have lower confidence in the near to medium term outlook. “We received calls from a regular local supplier asking to support at any quantity. This is very alarming, especially with China market facing correction at the moment,” a buyer informed.

Meanwhile, Vietnamese buyers are still negotiating very hard for discounts on June shipment offers. “We are having some ready stock Kuwait HDPE film at $1360/ton CIF Vietnam, LC AS term and yet, our customers are unwilling to take. For LLDPE film, acceptance at $1190-1200/ton is low and a number of buyers have actually skipped buying this month,” an international trader informed.