Asia Daily PP and PE Overview 2 July 2018

CHINA

• Firmer futures market shows limited stimulation on spot ground 
• Limited movement in the import market, currency depreciation continue to play its role 

Polypropylene (PP)

Total inventories at Sinopec and CNPC’s warehouses rose 105,000 tons over the weekend to approximate 755,000 tons as of 2 July 2018, and might continue to pile up in the coming days, sources said, as demand in the country remains soft. Efforts to elevate spot ground following the recent surge in energy and Dalian Commodity Exchange ha yielded a little result, as buyers tend to shy away from firmer prices.

“Inventories digestion rate is rather slow in recent days and the outlook for July remains cloudy amid the traditional off-peak season for homo-PP. We are exporting coal-based yarn cargoes to Vietnam at $1280/ton CIF and also received a very disappointing response,” a trader said.  

Polyethylene (PE)

Supply for LDPE film remains bloated in the country given a strong influx of import materials. Sources are not expecting the current inventories to go down anytime so soon given the persistent sluggish demand condition. “In the meantime, we are open to negotiation with serious buyers for LLDPE film and so far, customers would only procure small quantity to fulfil immediate needs,” a trader said.

The depreciation of the Chinese Yuan against the US dollar continue to play its role in discouraging interest in import materials and the reduction in prices do little to spur demand. “We are unable to increase prices in the local ground and therefore, having little appetite for currency risks. At the moment, we prefer to adopt a conservative stance,” a trader informed.   

SOUTHEAST ASIA 

• Competitive duty-free cargoes continue showing up in the region
• More deals reported on Saudi LLDPE film as supplier step back on offers 

Polypropylene (PP)

In spite of the surging upstream energy complex and strong Dalian Commodity Exchange that might discourage Chinese suppliers from exporting, Southeast Asian buyers are still reluctant to scout for homo-PP cargoes amid the traditional off-peak season. Besides, traders are still having non-dutiable parcels on hand, and currently offering at the stable to slightly softer week-on-week.

“We have reduced offers for Chinese coal-based homo-PP yarn $5/ton to $1275/ton while keeping Indonesian cargoes steady at $1300/ton, all based on CIF Vietnam, LC AS term. Trading activities are slow and the market might remain on this track in the coming week,” a trader said. 

Polyethylene (PE)

A major Saudi Arabia producer stepped back on July shipment offers by $10/ton for both HDPE and LLDPE film cargoes, sending the latest prices to $1350/ton and $1160/ton for both grades respectively. Deals for LLDPE film in Vietnam and Indonesia are healthy, sources said, while buyers are more cautious about HDPE film after Thai cargoes concluded below the $1350/ton threshold in the previous week.

“Customers find the adjusted LLDPE film prices to be competitive and we managed to sell out most of the allocation. Local supply for this grade in Indonesia remain short and buyers with import license here are turning to import market for an alternative source of supply,” an international trader informed.