Asia Daily PP and PE Overview 5 June 2018

CHINA

• Domestic demand remains mediocre
• Downward pressure might accumulate as plants completed maintenance work

Polypropylene (PP)

Trading activities in domestic ground remain very calm and it appears that buyers are not responding to the changes in spot offers in recent days. There has been report that manufacturers in the PP sectors are mostly operating below 60% capacity due to slow end product businesses with a trader informed, “Market might be short of a certain grade, yet our customers are not very enthusiastic in making fresh buys. We are watching out for an export opportunity at the moment.”

In a correction, total PP and PE inventories at Sinopec and CNPC were at 780,000 tons on 4 June 2018, and have been reduced to 745,000 tons as of 5 June 2018.   

Polyethylene (PE)

Given the persistently weak demand in local China market, a major Thailand producer decided to down-adjust offers for HDPE and LDPE to China by $10/ton from last week while maintaining LLDPE film stable. However, such minor reduction does not seem to be attractive enough to Chinese buyers, who have been adopting a wait and see position over the past week amid falling domestic offers.

“Our customers are very conservative about making purchases claiming that local cargoes are also competitive at the moment. Purchasing activities are in gridlock and we fear further reduction in the coming week,” a trader commented.

SOUTHEAST ASIA 

• Buyers await price correction for import homo-PP 
• LLDPE film supply in Indonesia might remains tight due to production issues

Polypropylene (PP)

A major Saudi Arabia producer decided to step back on June shipment homo-PP cargoes to Vietnam by $20/ton after a weeklong negotiation. Latest prices stand at $1300/ton CIF Vietnam, LC AS term, and several deals have been observed. It is important to note that the maker’s homo-PP allocation to Vietnam for June shipment is only approximately 300 tons, and therefore, buyers reluctantly accepted the offers in small quantity.

The reluctance in making replenishment is building up across the region and players now strongly believed that market has hit the peak, which means a downward adjustment is possible in the near term. “We are monitoring further development and would only proceed with fresh buy in the coming week if prices come down. Most Muslim countries are entering holiday mood and this would affect suppliers to a certain extent,” a buyer informed. 

Polyethylene (PE)

While demand for PE in local Indonesia is slowing down given the fast-approaching Ramadan holidays, suppliers here are not at all pessimistic about the near-term outlook. Both major producers in the country unexpectedly shutdown LLDPE productions due to unspecified production issue and the restart date remains unclear. Such development might keep the supply tight moving forward, and yet, it very much depends on the state of demand in the post-holiday term to continue pushing prices higher.