Asia Daily PP and PE Overview 10 August 2018

CHINA

• PP market hold steady 
• Chinese traders continue focusing on diverting USA cargoes to other markets 

Polypropylene (PP)

In spite of the correction that taking place in the futures market, spot homo-PP continues to climb higher, adding another CNY100/ton ($16/ton) on the final trading day of the week and send domestic offers to the range CNY10,000-10,200/ton including VAT ($1260-1286/ton without VAT), EXW East China, cash equivalent.

Inventories digestion is getting slower. PP and PE stocks at Sinopec and CNPC’s warehouses have not changed at 680,000 tons after a surge in the previous trading day. Converters, including those claimed to have been able to transfer the higher raw material costs to end product prices, decided to sideline hoping that further correction on Dalian Commodity Exchange would pressure spot sellers to reduce prices. 

Polyethylene (PE)

Traders put heavy attention on moving USA cargoes to other destination after the Chinese government slapped 25 per cent import duties on import PP, PE from the USA. “We have diverted 2000 tons of PE originated from the USA to Vietnam. Chinese customers are no longer interested in these cargoes and therefore, we need to revamp our strategy going forward,” an international trader informed.   

SOUTHEAST ASIA 

• Market concentrating on local ground 
• Offers for USA cargoes continue to emerge 

Polypropylene (PP)

There are very limited movements in the import market on the final trading day of the week as most overseas sellers either sold out allocation or withdrew all offerings in preparation for a fresh hike in the coming days. More movements are observed in the regional local markets, where suppliers are attempting to catch with the latest development in the import ground.

Vietnamese buyers reported receiving locally held Saudi homo-PP with VND800,000/ton ($34/ton) hike from earlier this week to VND34,200,000/ton including VAT ($1336/ton without VAT), FD Vietnam, cash equivalent. However, the hike is very much illustrative, as no deals have been reached at such price.   

Polyethylene (PE)

More USA PE cargoes emerged in Southeast Asia and deal for prime grade LLDPE film is observed at $1080/ton CIF Indonesia, LC AS for 300 tons. Similarly, a Vietnamese buyer reported having purchased 2000 tons of USA LLDPE film this week including both prime and off-grade cargoes.

Southeast Asian buyers started to raise concern over the near-term outlook considering the abundant supply for both USA and Indian LLDPE film in the open market. There will be a major shift in trade flow, sources said, while adding that it might be difficult for import LLDPE film to rebound sharply in the coming weeks.