Asia Daily PP and PE Overview 11 September 2019

CHINA

• Local market insulated from falling futures market 
• Overseas sellers cut PE offers as demand for imports remain sluggish 

Polypropylene (PP)

The January 2019 delivery contracts for both PP and LLDPE on Dalian Commodity Exchange fell sharply by the second half of the trading day, however, spot market held relatively steady on a strong claim of tightening availability. 

Domestic traders are patiently waiting for the pre-holiday replenishment to take place before the weeklong National Day holidays on the first week of October. “With weaker export orders and unfavourable exchange rate, converters might focus more on local cargoes. We remain hopeful about the near-term outlook,” a trader said.   

Polyethylene (PE)

In the import market, several overseas suppliers including major producers from Thailand and Qatar decided to lower offers, especially for LDPE film cargoes following disappointing sales results in the previous week. In fact, Qatari PE sees a reduction of $10-20/ton on LLDPE film to $1100/ton and $30/ton on LDPE film to $1120/ton, all based on CFR China, LC AS term.   

“We plan to place bids below $1100/ton threshold for LLDPE film. Export orders are weak and in fact, we have not received any new orders from USA customers due to the intensified trade war. Our production is at 50 per cent normal rate,” a PE packaging converter said.

SOUTHEAST ASIA

• Stable offers for dutiable homo-PP cargoes face resistance 
• Limited LLDPE film Mi 2 gives little support to price trend

Polypropylene (PP)

There are very limited new direct offers for import homo-PP across Southeast Asia market, though traders are attempting to maintain offers for dutiable cargoes to the region unchanged from last week, and so far, facing really stiff resistance. 

“We only have few containers of Saudi homo-PP yarn cargoes at $1250/ton and bids are coming in at $20-30/ton lower. Sales are not as smooth as we expected,” an international trader offering to Vietnam informed. 

This comes as buyers are hoping to achieve a larger discount on duty-free cargoes from Thailand and South Korea, with most buy ideas collected in the range $1250-1260/ton CIF, LC AS. 

Polyethylene (PE)

The lack of LLDPE film Mi-2 grade does not seem to provide sufficient support for any major rebound in prices. Both major producers in Southeast Asia – ExxonMobil and Thailand’s PTT are not having cargoes at the moment due to either change in production schedule or maintenance work. 

“USA cargoes are widely available at relatively good prices - $1110-1120/ton CIF, LC AS. Despite the long lead-time, this is the main factor limiting the market from any substantial hike. The year-end season might bring more USA materials to Asia as producers here might need to clear out inventories before the Christmas and New Year holidays,” a market source added.