Asia Daily PP and PE Overview 19 June 2018

CHINA

• Limited trading activities after Dragon Boat Festival 
• Player watch out for the next move in the escalated trade tension between China and the USA

Polypropylene (PP)

The general sentiment received a hit from the upgraded trade tension between China and the USA. Dalian Commodity Exchange plunged three digits in value, sending a chillwave down the spot market. Spot traders are sandwiched between persistently weak demand and low inventories pressure among producers, decided to offer additional CNY50-100/ton ($8-16/ton) discount to smoothen sales process. “Result is rather disappointed. Arbitrage traders are very aggressive, creating intense competition in the spot ground. We are carrying higher costs cargoes, hence, having very limited room to navigate prices,” a trader said.

Site visit to BOPP sheet manufacturers found that a number of plants have shut down due to poor profit margins. “Our end product inventory is twice higher than usual as it is the traditional off-peak season now. There is no rush to make fresh buy since the market is facing downward pressure,” a converter said.   

Polyethylene (PE)

Import PE to China remains on the stable to softer trend, highlighted by the $5/ton reduction on Thailand LLDPE and HDPE film while Taiwanese HDPE yarn and film fell $10-20/ton from last week to $1410-1420/ton CFR China, LC AS term.  

USA petrochemical products which include LDPE and LLDPE (Polyethylene with a primary shape specific gravity of less than 0.94), are on the second list of targeted products by the Chinese government to face 25% tariff, however, no implementation date is set yet. “We are watching out for the next announcement. A good thing is that the expected impact of the new USA PE capacity on China market might be mitigated to a certain extent would the tariffs take effect,” a trader commented.   

SOUTHEAST ASIA 

• Limited trading activities as major markets are on holiday
• July outlook soften as overseas suppliers mulling new offers 

Polypropylene (PP)

There are very limited new import offers observed across the region as Malaysian and Indonesian buyers are mostly still on Ramadan holidays. Sources are hoping to see an additional reduction in the near term following the price cuts last week, however, buyers are not betting on major adjustment.

“Supply remains tight given a number of plant shutdown in June and July. We only hope to achieve deals for homo-PP yarn at $1270-1280/ton for main-stream cargoes,” a Vietnamese buyer commented.

Polyethylene (PE)

Overseas sellers are planning for July shipment offers and it appears that the stable to softer trend might prevail. “Supply for LLDPE film from our side has improved this month and demand across Asia remains pretty below expectation, and therefore, we might loosen stance on the cargoes slight compared to last month,” a Middle Eastern producer informed.