Asia Daily PP and PE Overview 17 July 2018

CHINA

• PE market seems to have better transactions than PP 
• Trade war concern discourage buying interest for USA PE cargoes 

Polypropylene (PP)

The Chinese PP market holds mostly steady day on day. Domestic traders have not adjusted spot offers for homo-PP cargoes despite firmer futures market due to the lack of strong demand. Total PP and PE inventories at Sinopec and CNPC’s warehouses dropped about 25,000 tons day-on-day to approximate 710,000 tons, though players are claiming better sales result for PE than PP.  

Polyethylene (PE)

In fact, players in Northern China area seem to be in a better position this week as converters in the agricultural film sector return to make replenishment, which has been supporting higher prices over the past several trading days. “Buyers are not sourcing in large quantity, however, we managed to deplete some inventories. Demand might continue to improve in August as the manufacturing season kick-start,” a trader said.

In the meantime, import offers for Qatar HDPE film fell below the $1300/ton threshold for a first time in months, reaching $1280/ton CFR China, LC 60 days term. Chinese buyers are considering making larger purchases if overseas suppliers agree to lock the exchange rate in the light that the Chinese Yuan might depreciate further. If such consideration materialized into action, the market might pick up significantly considering the volume.

Meanwhile, Chinese buyers are shying away from the USA PE cargoes fearing the intensified trade war between the two countries. Traders here are offering these parcels to the nearby Vietnam market, yet received a disappointed response.  

SOUTHEAST ASIA 

• Southeast Asian suppliers reduced import homo-PP offers to Vietnam
• USA materials shows up more often in Vietnam as China market shied from this origin
• LLDPE film market might be nearing the bottom 

Polypropylene (PP)

Vietnamese buyers reported receiving final prices for Thailand and Philippines homo-PP at $1265-1270/ton CIF, LC AS though transactions remain thin. Sources are waiting for further reductions and there is a strong expectation that Middle Eastern suppliers might have to match the latest development to remain relevant in the market. 

“There is a good chance that regular homo-PP yarn originated from Saudi Arabia might fall below the $1250/ton threshold. We have not spotted any indication that support a rebound in the near term, and therefore, prefer to be cautious,” a buyer here commented. 

Polyethylene (PE)

As Chinese players shied from procuring USA origin PE cargoes on the concern over the escalated trade war, these materials started showing up more consistently in Vietnam over the past couple of weeks though the available quantity remains limited. 

An international trader reported having sold 400 tons of USA LLDPE film Mi-2 in the previous week at $1130/ton CIF Vietnam, LC AS and today, offering Mi-1 grade at $1120/ton with the same term. “Many bids are coming in at below $1100/ton threshold and we have not decided on the final prices. We hope more quantity would become available in the coming month,” the source added.

In the meantime, overseas sellers are becoming reluctant to cut import LLDPE film below the $1100/ton mark as China market rebounded slightly this week. Indian LLDPE film has achieved deals at $1110/ton CIF Vietnam this week.