Asia Daily PP and PE Overview 28 June 2018

CHINA

• Local sentiment pick up slightly thanks to stronger futures market 
• Import LLDPE and LDPE film continue to fall

Polypropylene (PP)

Domestic sentiment sees some improvement partially thanks to the recovery in the futures market. Meanwhile, converters are sourcing cargoes at the end of the month to fulfil value-added tax requirement. Spot offers for homo-PP jump as much as CNY100/ton ($16/ton) day-on-day while total inventories at Sinopec and CNPC’s warehouses fell 25,000 tons to approximate 690,000 tons as of 28 June 2018.

Leveraging the weakening Chinese Yuan against the US dollar, PP suppliers here have been actively exporting cargoes over the past couple of week; however, would local prices continue to rise in the coming days, cargoes might remain in the local market. “This is because PP availability is still not as high as PE, and hence the sales pressure is also less intense,” a producer explained. 

Polyethylene (PE)

Import LDPE film fell to multi-month lows, which is less of the appreciation of the US dollars and more of the bloated supply condition in the local ground. Middle Eastern LDPE film cargoes are now offered at $1140/ton CFR China while rumour has it that special deal for Indian materials is well below this levels.

Players have been blaming the weakness in LDPE film market for anchoring the mPE and LLDPE film sector, and this makes sense as converters are lifting the proportion of cheaper materials in the product formula. “We used to have the ratio of LLDPE over LDPE at 60:40 and at the moment, we have overturned the formula to 40:60 to reduce raw material costs. This is the largest percentage of LDPE film we could use in our end products,” a manufacturer informed.     

SOUTHEAST ASIA 

• Import homo-PP to Vietnam continue to inch lower
• More overseas sellers slashed July PE offers to the region

Polypropylene (PP)

Import homo-PP to Vietnam continue to inch lower as the market is marked by the deals concluded for yarn cargoes originated from China at $1280/ton and Saudi Arabia at $1270/ton, all based on CIF, LC AS term. It becomes clearer that suppliers are facing sales pressure, from which buyers started adjusting the expected bottom prices. 

“We were initially planned to make purchases would yarn prices reach the $1270/ton level. However, the market is here and still there is no sign of a rebound and therefore, we decided to wait further instead of immediately jumped into new deals,” a buyer said. The source added that the depreciation of the local currency undermines the cuts in import prices.

Southeast Asian suppliers seem to hold very firm stance on import homo-PP cargoes to Indonesia with Singapore, Malaysia, Thailand and Philippines materials reported in the range $1340-1380/ton, CIF, LC AS. “These cargoes can’t be sold because domestic traders are offering at more competitive levels. We think overseas sellers are not putting attention in Indonesia at the moment due to the lack of strong demand,” a buyer said.     

Polyethylene (PE)

Another major Saudi Arabia producer cut July shipment PE offers to Southeast Asia by $10/ton for HDPE film and $20/ton for LLDPE film, bring the latest price list to $1360/ton and $1160-1170/ton respectively, all based on CIF, LC AS term. Buyers are showing positive response toward the LLDPE film offers while hoping to achieve deal below the $1350/ton threshold for HDPE film.

The issue of local currencies depreciation continue to stifle the import market in general and buyers with immediate need are turning to the local ground to avoid exchange rate risks. “Except for LLDPE film, we temporarily suspend inquiries for import cargoes at the moment. Supply for LLDPE film is short in local ground,” an Indonesian buyer added.