Asia Daily PP and PE Overview 28 August 2018

CHINA

• Domestic market sees steady movement 
• Major overseas sellers announced new PE offers to China 

Polypropylene (PP)

Arbitrage traders are actively looking for low price cargoes in the spot market following the strengthening in futures trading. Besides, major local producers are pushing quantity to traders as part of the month end stock clearing. “While the market might see reduction in inventories at producers’ warehouses, distribution market is facing pressure,” a trader commented.

Visiting several medium-scale woven bag makers in the Shandong area found that most are operating at around 50% capacity due to lack of end product orders. “If look at profit margin per unit, we are good at the moment, just that orders are too weak,” a converter added. “Demand might pick up in the coming month and therefore, we are willing to make fresh replenishment if local homo-PP yarn reaches CNY9500/ton,” another buyer said.

Polyethylene (PE)

Major overseas producers from Singapore, Thailand and Saudi Arabia have announced new PE offers to China. It becomes clear that prices at the upper end of the overall prices range face stiff resistance, which explained to why major Thailand maker stepped back on the offers despite having limited availability.

In the meantime, supply for Iranian PE cargoes seems to ease with buyers purchasing based on the formula pricing method are able to obtain larger quantity. “We temporary stopped buying LDPE film at the moment as we have 1000 tons of Iranian LDPE film due to arrive in September. Our regular Iranian suppliers started to offer better quantity for formula deals, signalling improved supply condition for this origin,” a trader informed.   

SOUTHEAST ASIA 

• Buyers continue negotiating for September PE cargoes 
• Regional PP market struggles to firm up 

Polypropylene (PP)

Major suppliers for PP started to step back on import offers to Southeast Asia as the effort to keep prices firm have shied buyers away. Deals for homo-PP yarn originated from Saudi Arabia achieved at $1250/ton in Indonesia, a $10/ton discount from initial offers. 

“Even Vietnamese homo-PP yarn is now $20/ton lower than price list at $1270/ton CIF Indonesia, LC AS. We are planning to secure some quantity. The market seems unable to firm up, yet difficult to witness any major drop no thanks to tightening supply,” an Indonesian buyer commented.

A Saudi maker, who was insisting on homo-PP yarn to Vietnam last week at $1270/ton, has now decided to give $10/ton discount to close deals at $1260/ton. Sources are expecting that dutiable cargoes would fluctuate in the range $1250-1260/ton CIF Vietnam in the near term. 

Polyethylene (PE)

Suppliers started sending more USA PE cargoes to Indonesia this week with deals for HDPE film reported at $1290/ton and LLDPE film offered at $1120/ton, CIF Indonesia, LC AS. Buyers reported that HDPE film cargoes are shipped from Taiwan main port, cutting the lead-time significantly.

“We are discussing with the supplier for USA LLDPE film to close deal at last week’s level - $1100/ton and currently waiting for feedback. Export orders for our end product are not very strong, hence we have time to wait,” a buyer said.

Vietnamese buyers continue to negotiate for September shipment offers after two major Saudi makers announced fresh prices in the previous trading days. “To prepare for the year-end festival, we have to place new orders now since the lead-time for deep-seas cargoes are long. Our dilemma is that USA cargoes might come during late quarter 4 at large discount, which might depress the market,” a buyer said.