Asia Daily PP and PE Overview 7 June 2018

CHINA

• Trading activities in local ground remain soft 
• Import LLDPE film sees better movement as prices go down 

Polypropylene (PP)

There are very limited movements in the domestic spot market and suppliers once again offer CNY50-100/ton ($8-16/ton) discount for both PP and PE cargoes in order to smoothen sales process. “Arbitrage players are looking for low-cost cargoes as futures market firm up, however, converters remains cautious about large purchases,” a trader said. Total PP and PE inventories at Sinopec and CNPC warehouses fell 10,000 tons from the previous trading day to approximate 710,000 tons as of 7 May 2018.

While Sinopec reportedly sold regular homo-PP at $1290/ton CIF Vietnam, many traders in the country are unable to follow such prices citing higher costs. “The lowest level we could offer is $1300/ton FOB China, LC AS term. We are not seeing any export opportunity at the moment,” a source said. 

Polyethylene (PE)

A major Saudi Arabia producer agreed to lower import LLDPE film prices to China to $1160-1170/ton CFR, LC AS term and a good number of deals have been reported. “We purchased 500 tons and requested for additional 10 containers, however, the supplier has sold out all available quantity,” a buyer informed. And yet, the market seems to only have inquiries for a specific grade, as Indian LLDPE film is available at $1155-1165/ton with the same term and no immediate deals are seen.

SOUTHEAST ASIA 

• Import homo-PP shows sign of softening
• Regional PE market remains calm with limited transaction 

Polypropylene (PP)

Import homo-PP to Vietnam slip below the $1300/ton threshold for the first time in four weeks, underlining the softer stance among overseas sellers. In fact, regular Chinese homo-PP yarn concluded at $1290/ton for yarn grade and $1285/ton for injection to Vietnam, all based on CIF LC AS term. These cargoes are exempted from the 3 per cent import duties. “We confirmed purchasing 300 tons of yarn and 50 tons of injection due to the competitiveness. We do expect other suppliers to follow suit in the coming week,” a converter informed.

In the meantime, more trading activities are observed in this market as prices go south. A trader reported to have sold more than 1000 tons of Thailand homo-PP (S1003) at $1300/ton to Vietnam with a buyer purchased 500 tons added, “Dutiable cargoes are now facing tremendous pressure as non-dutiable material become more competitive. We are waiting for Saudi homo-PP to go down $30-40/ton from the existing levels before making an additional buy.”

Polyethylene (PE)

There is very limited movement in the regional PE market. However, several Indonesian buyers decided to make last minutes purchases for LLDPE film fearing that continued tightening local supply might push prices higher in the post-holiday term. “We managed to source additional 300 tons from distribution market and would gradually lower operating rate in the coming week. With this replenishment, we have sufficient buffer time in the post-Ramadan period if prices firm up,” a converter informed.