Asia Daily PP and PE Overview 27 July 2018

CHINA

• Demand prospect for PE appears to be positive 
• PP sector remains steady with little sign of strong revival 

Polypropylene (PP)

Chinese PP market is in a lower position than PE in term of the prospect demand condition, sources said, citing the fact that converters in the country are struggling to cope with high raw material costs and slow end product orders.

“That’s why import offers for mainstream PP cargoes at $1200/ton CFR China still facing difficulties in concluding deals. Buyers are hoping to obtain the additional discount to compensate for the exchange rate and to avoid profit margin erosion,” a market source added.   

Polyethylene (PE)

A good number of converters in the flexible packaging sector reported having received new end product orders, indicating a better demand prospect for PE in the near to medium term. At the current prices for LLDPE and LDPE film, converters are still making a profit of approximate CNY500/ton ($74/ton) and therefore, creating a conductive environment for suppliers to introduce small to moderate hike in the near term.

In the meantime, the import market is less in favour on the final trading day of the week driven mainly by the continuous weakening Chinese Yuan against the US dollar. It appears that the escalating trade war is biting deeper into the buyer’s confidence, from which many decided to avoid cargoes originated from the USA. “These cargoes are priced at the same levels as the Indian materials, and therefore, not being able to stimulate the risk appetite among buyers,” a trader said.      

SOUTHEAST ASIA 

• Saudi major sold out PP, PE to Vietnam after minor discount 
• Sentiment in the import market appears to improve 

Polypropylene (PP)

Import PP market in Southeast Asia remains soft as major international supplier conceded to minor discount from initial price list to smoothen sales process. Middle Eastern homo-PP yarn touched the $1225/ton CIF Vietnam, LC AS term, though available quantity is rather limited. “There is only 100 tons available and we have to bundle with other product. Despite the special nature of the deal, we think room for further reduction is still there,” a converter bought the cargoes said. 

Polyethylene (PE)

Major Saudi Arabia producer reportedly sold out PE cargoes to Vietnam after $20/ton discount on HDPE film while LLDPE film receives no reduction. Deals are observed at $1300/ton and $1120-1130/ton respectively, all based on CIF Vietnam, LC AS. 

Import PE market in Vietnam is surprisingly active on the final trading day of the week, and players are explaining that the recent technical issues at a series of LLDPE plants including Eastern Petrochemical Company (SHARQ) and PTT Thailand might contract availability in the coming weeks. “And therefore, we have to seek an alternative source of supply,” a buyer commented.