Asia Daily PP and PE Overview 6 September 2018

CHINA

• Average local trading activities 
• Looming third round of USA tariffs concern Chinese manufacturers 

Polypropylene (PP)

Trading activities in the local ground are average today, sources said. Though both Fujian Refinery (FREP) and Shanghai Secco are scheduling major maintenance shutdown in the early of the final quarter of the year that is expected to curtail local supplies, traders are too eager to achieve monthly sales target before the long holidays take place.

“There will be the Mid-Autumn Festival holiday by end of the month, followed by the week-long National Day holidays. We are offering some minor discount to smoothen sales process,” a trader reported.

Polyethylene (PE)

In the meantime, Chinese buyers are adopting an even more conservative stance over the near-term outlook as the USA government might impose the third round of tariffs on Chinese imports after the public hearing period ended on 6 September 2018. 

"We might have to focus more on the domestic ground until the trade issue resolved. In the meantime, we are exploring the new export destinations," a flexible packaging manufacturer informed while adding that export orders have dropped 20% compared to the same period last year.

SOUTHEAST ASIA 

• Purchasing interest slow down on fear of currency contagion
• SEA converters might benefit from China-USA trade tension 

Polypropylene (PP)

Saudi Arabia major hold import homo-PP offers steady at $1265/ton to Vietnam compared to last week, however, it is less likely that the maker could hold firm on the price considering the current demand condition, sources. A number of buyers have expressed the buy idea in the range $1240-1250/ton CIF for the cargoes.

The combination of looming third round of tariffs between China and the USA and the spreading currency issues across emerging market (Turkey, Argentina, South Africa and Indonesia) is deeply concerning Southeast Asian buyers. 

“Both external and internal issues are stalling the import market in Indonesia. Supposed that buyers with BMTDP scheme have to speed up the purchases for dutiable cargoes now to fulfil the quota, yet the unclear import income tax (PPh) regulations are putting those plan on hold,” an Indonesian source said.

Polyethylene (PE)

Flexible packaging converters in Indonesia and Malaysia started receiving an increasing number of export inquiries for the end product to be exported to the USA amid the intensified threat of a full-blown trade war between China and the USA. Vietnamese manufacturers meanwhile, might not enjoy such development due to the on-going anti-dumping investigation on the woven sack and flexible packaging.

In the meantime, it appears that a major Saudi maker is struggling to conclude September shipment cargoes for HDPE film at $1300/ton to Vietnam as demand for this grade remains sluggish here. “We have been persistently asking for another $10/ton discount, but our principal supplier refused to. We are still carrying 80-90% of the allocation as the cargoes off-take rate is very slow,” a distributor informed.