Asia Daily PP and PE Overview 26 November 2018

CHINA

• Both PP and PE markets are under tremendous pressure
• Increased inventories levels make it harder for sellers in the country 

Polypropylene (PP)

Total PP and PE inventories at Sinopec and CNPC’s warehouses surge 50,000 tons from last Friday to approximately 860,000 tons as on 26 November 2018. It appears that local producers are struggling to deplete stocks in the desirable pace over the past week, and what adds more concern to the market is the bloated stock levels among coal-based producers. Domestic spot homo-PP slid another CNY200-400/ton ($29-58/ton) on the first trading day of the week.

In the import market, Indian homo-PP concluded deals at $1050/ton CFR China while blank packaging South Korean cargoes are at $1040/ton with the same term. Both of these cargoes are being diverted to Vietnam market at $1120/ton and $1100/ton CIF, respectively.

Polyethylene (PE)

After the deals for regular Saudi LLDPE film reached $980/ton at the end of last week that shivered market sentiment, today market sees more hasty development as another Saudi producer agrees to transactions of HDPE film at $1040/ton CFR China, LC AS. 

Market is in a state that ones would prefer to be cautious, sources said. Many traders continue to forward selling cargoes at much lower levels from the official price list that confused buyers. “We do receive many calls from customers, but to check on prices rather than showing the real interest. This condition might persist in the coming days unless we conceded to large discount,” a trader offers Taiwanese HDPE film at $1100/ton CFR China, informed.   

SOUTHEAST ASIA 

• More re-export homo-PP cargoes show up in the region 
• Middle Eastern LLDPE film moves closer to USA cargoes 

Polypropylene (PP)

There is no surprise that more re-export homo-PP cargoes from China are showing up in the Southeast Asia market at relatively competitive levels. In fact, Indian yarn cargoes are now available at $1120/ton CIF Vietnam, LC AS term for mid to late December arrival while prompt parcels from China bonded warehouses are at $1140/ton with the same term.

“Converters might be interested in these cargoes, but not traders. The market has not shown any improvement but continues to deteriorate. We prefer to wait and see for now,” a buyer said.

Polyethylene (PE)

Another major Saudi Arabia producer announced December shipment offers for PE to the region with reductions of $110-120/ton to $1140-1150/ton for HDPE film and $60-70/ton to $1040-1060/ton for LLDPE film, all based on CIF, LC AS.

Buyers are planning to ask for $30-40/ton discount from the initial price list on deals, though the enthusiasm is rather low. In the meantime, there have been reports that Qatar LLDPE film has achieved deals at $1025/ton in Vietnam market, portraying minimal gap with the USA materials.

“Judging the popularity, we expect USA suppliers to down-adjust prices in a matter of days. We are in no hurry now as the arrival of the previously purchased cargoes is inflating local supply and pressuring prices,” an Indonesian player added.