Asia Daily PP and PE Overview – 20 September 2018

CHINA 

• Local sentiment remains healthy, minor resistance started to emerge 
• Healthy demand attracted more offers for Asian PP cargoes 

Polypropylene (PP)

The inventories digestion rate observed at Sinopec and CNPC’s warehouses drops slightly compared to the past two trading days, with the shipped out quantity was only at 20,000 tons, resulting in the total stock at 650,000 tons as of 20 September 2018. However, according to market participant here, sentiment remains positive thanks to the continued pre-holiday replenishment activities.

There is a minor resistance toward the latest price list, which has increased CNY350-450/ton ($51-66/ton) compared to the beginning of the week. “This is much anticipated. However, strong demand coupled with tight availability provide sufficient support,” a trader said.

Following the strong sales result for Vietnamese and South Korean suppliers, Chinese buyers reported seeing irregular Philippines homo-PP yarn at $1260/ton CFR China, LC AS term. “This cargo is not frequent in China,” a buyer said while adding that some negotiations are taking place to obtain discount on deals. 

Polyethylene (PE)

The PE market is moving in a much-anticipated direction. With strong sales records from major Asian producers over the past three trading days, traders started taking a firmer stance on import offers, however, nothing is too major. Sellers are attempting to hold offers for import LLDPE film above the $1100/ton threshold, including the Indian cargoes that were earlier priced at $1090/ton CFR China, LC AS.

Business as usual for companies in the Huangpu and Guangdong area, where super typhoon Mangkhut caused flood and soak a number of pallets in several major warehouses. “These pallets will be sold at much lower prices. We need to procure other cargoes for replacement,” an affected trader informed. 

SOUTHEAST ASIA 

• Buyers reluctantly accepted Saudi homo-PP cargoes 
• Purchasing interest holds low and plunging ethylene costs added more pressure 

Polypropylene (PP)

Saudi Arabia homo-PP offered to Vietnam and Indonesia earlier this week at $1240/ton for yarn grade and $1230/ton for injection started seeing some acceptance, however, buyers are not very aggressive. Indonesian customers are in need to fulfill the BMDTP quota to make sure cargoes arrive before January 2019.

“Vietnamese buyers are more reluctant. The thing is that stronger upstream propylene costs and tighter availability than expected might prevent the market from any major drop in the near to medium term. Materials from new plants are going all to China this week,” an international trader added.

Polyethylene (PE)

The Asian ethylene market has plunged approximately $100/ton compared to the beginning of September. Regional buyers are just too wary to proceed with new buys at the moment, especially with expectation for softer October growing strong. 

Southeast Asian HDPE film usually has more leverage in Indonesia market due to the 15% import duties, however, prices above the $1400/ton threshold based on CIF term is now facing a very tough condition. “We have stepped back on the price list by $40/ton from earlier this week to $1390-1400/ton CIF, and yet, bids are coming in at $1350/ton,” an international trader offering Thailand HDPE film to Indonesia said. “Demand outlook is a little bearish under a confluence of factors,” the source added.