Asia Daily PP and PE Overview 23 August 2018

CHINA

• Plunged PP futures affected spot market 
• Demand for LLDPE film remain resilient toward the weekend 

Polypropylene (PP)

Despite the initial firmness in the morning session, January delivery contract for PP on Dalian Commodity Change plunged CNY243/ton ($35/ton) by the end of the trading day. Spot market is technically stalled and sources are expecting a larger discount to emerge in the coming days.

In the import market, offers for regular Middle Eastern cargoes hold steady in the range $1230-1240/ton CFR China, LC 0-90 days term. “However, only customers having appointed grade for end products would proceed with purchases. Other buyers are not very eager amid unfavourable exchange rate,” a trader informed. 

Polyethylene (PE)

In contrast to the PP sector, LLDPE film market is rather active in both local and import ground. “We sold 1000 tons of LLDPE film to the domestic buyer today. Sentiment is good as players mostly carry positive expectation for September,” a stockist added.

Import HDPE and LLDPE cargoes from the USA officially face 25% import duties in China today. A number of traders, who purchased this origin previously reported to have already transferred all quantity to exporters for other markets. “The thing at the moment is that regular cargoes are not widely available which lead to mild anxiety among market participants,” another market source added.

SOUTHEAST ASIA

• Import homo-PP struggles to firm up 
• Market eagerly waiting for new PE offers; expectation calls for stable levels

Polypropylene (PP)

The regional PP market is in a real struggle to firm up and for the first time is two weeks, import homo-PP yarn to Vietnam concluded at below the $1250/ton threshold. “We purchased Indian homo-PP yarn at $1245/ton CIF Vietnam, LC AS term, a $10/ton reduction from the initial price list. It looks like the market is losing momentum since demand is not supporting,” a converter said.

In Indonesia, non-dutiable cargoes emerged at the stable to $10/ton reduction and yet buyers here are just too conservative. The exchange rate is the main culprit, sources added. “Homo-PP yarn is available in the domestic market at $1310/ton, but it is free-delivery term. This makes import cargoes less competitive, especially with the Rupiah continue to depreciate,” a market source added. A major problem in local Indonesia market at the moment is the lack of truck after the latest transportation legislation that reduce the loading capacity of the small truck.      

Polyethylene (PE) 

Southeast Asian buyers are waiting for major Middle Eastern producers to announce new offers, however, most are expecting September shipment offers to remain stable from the previous month, especially for LLDPE film. “This is because of the tremendous pressure from the USA materials and the currency exchange rate,” a buyer said.

“Even Thailand LLDPE film is still available at $1150/ton – final price. We do not expect regular Saudi Arabia cargoes to be higher than this,” another buyer added.