Asia Daily PP and PE Overview 12 July 2018

CHINA

• More suppliers step back on import PE offers to smoothen sales process 
• Slow end product business, depreciating local currency discourage replenishment 

Polypropylene (PP)

The recovery in futures market has been providing support to spot ground throughout the past three trading sessions, pushing homo-PP prices higher. However, converters are resisting the new offer levels strongly citing slow end product businesses. “The depreciation of the Chinese Yuan does help in exporting business, however, compared to last year, the number of end product orders has dropped 20 per cent. Profit margin is too thin now and we prefer not to procure large quantity,” a household product manufacture informed.

Several other converters are reporting similar situation with demand for end product show a reduction of 20-30% year on year, raising question about the sustainability of the current firming trend.

Polyethylene (PE)

More overseas sellers, whose offers were at the upper end of the overall price range decided to step back on the prices in order to smoothen sales result. In fact, deals for Thailand and Taiwanese HDPE film see another $10/ton decreased from initial price list to $1345-1350/ton CFR China, LC AS term.

Meanwhile, regular Saudi Arabia LLDPE film, which reached deals at $1120/ton earlier this week, has now slipped another $10/ton to $1110/ton CFR China. “Transactions are not healthy, hampered by the new round of currency depreciation. However, we think market is very near to the bottom now,” an international trader reported.

SOUTHEAST ASIA 

• Fear of further reduction keep buyer conservative
• Local PP, PE market in Vietnam extended falling trend despite exchange rate 

Polypropylene (PP)

There are very limited new offers observed across the regional market while buyers are retreating to the sideline to monitor further development, fearing that prices might fall further in the coming days. The plunge in energy complex added more anxiety to the already shaking market due to the intensified trade-war between China and the USA.

“We have made some small purchases earlier this week for Thailand homo-PP yarn at $1285/ton CIF Vietnam, LC AS term and currently just wait and see. Southeast Asian suppliers continue taking the lead in this downtrend while Middle Eastern sellers remain very much reactive to the movement,” a buyer commented. 

Vietnamese players in the PP sector are following closely the production and distribution progress of Nghi Son Refinery and Petrochemical, with concern that domestic market would continue to slide as new supply arrive the market.  

Polyethylene (PE)

The emergence on Saudi Arabia LDPE film in Vietnam at $1150/ton CIF, LC AS term has created a new low for this week. Many buyers are trying to limited purchases further given the uncertainty in the near term outlook. 

“The manufacturing season would only start in mid- August and therefore, we are so lack of confidence in the remaining on July. It is the 10 years mark since the last global financial crunch and cycle might repeat, especially at the current international trade condition. We are taking a step back and be more cautious now,” a market source added.