Asia Daily PP and PE Overview 27 December 2017

CHINA

• Trading activities continue slowing down
• Concern build up for LDPE film market outlook

Polypropylene (PP)

Trading activities in spot market is diminishing as players enter holiday mood. Yet, trader introduced a hike of CNY50-100/ton ($8-15/ton) on both PP and PE cargoes to reflex the effect from futures trading. Real demand from converters is rather lackluster and this condition is expected to persist throughout the remaining of the year.

Major Saudi Arabia producer announced January shipment offers for homo-PP at $1150/ton CFR China, LC AS term and several deals have been reported. Offers below the $1150/ton mark have not repeated in this week, indicating a gradual firming trend, yet buyers are very calm in making replenishment.

Polyethylene (PE)

Players fear that the LDPE film market would face bearish outlook in the coming months given lengthy supply in domestic ground. Strong replenishment activities in the import market for cargoes below the $1150/ton mark in the past week would inflate local availability even further once these shipments arrive, player said. “Our concern is that real demand from converters are not there, but mostly arbitrage traders taking cargoes in recent days. We have temporarily stopped all purchases to monitor further development,” a trader informed.

In contrast, Chinese players are expecting a bullish demand condition for HDPE pipe amid government’s continued effort in revamping the country’s gas distribution pipeline infrastructure. This is in line with environmental policy of reducing the use of coal across the industrial sector.    

SOUTHEAST ASIA

• Import Saudi homo-PP reaches $1200/ton mark in Vietnam
• Buyers actively placing bids for January shipment

Polypropylene (PP)

Import offers for regular Saudi Arabia homo-PP cargoes to Vietnam reaches $1200/ton, which surprised many market participant considering the weak demand condition in most other neighbouring markets. Deals are reported at $20/ton discount, at $1180/ton CIF, LC AS term. “We purchased some quantity for February shipment. Prices are too high at the moment and looking at the current condition, suppliers might implement further hike in the coming week,” a converter informed.

It is also worth noting that most buyers accepted prices at the $1180/ton are mostly converters while traders are not very into fresh replenishment at the current market levels. “We prefer to wait for lower costs cargoes purchased previously to arrive in second half of January. Current offers are too high while post-Lunar New Year outlook remains cloudy at the moment,” a trader said.

Polyethylene (PE)

For the second time this week, a major local producer in Indonesia has lifted PE offers regardless of the absence of buyers. HDPE film offers from the maker have firmed up for four consecutive weeks, accumulating a total gain of IDR2,050,000/ton ($151/ton), with limited supply and strong ethylene costs are the main driver. There are not much changes in term of market sentiment given the absence of buyers during the holiday week. Speculation however persists around the notion that the supplier’s main intention of lifting offers was not to close deals at the moment, but to create a firm start for the new year. “It is a table turned-around for HDPE film market. We are not confident if buyers could accept the latest offers,” a market source added.

Buyers in Vietnam are actively placing lower bids for import PE cargoes, including HDPE film, despite a small deals for Saudi cargoes have been concluded in the previous trading day at $1290/ton CIF Vietnam, LC AS term. “We are unable to accept anything above the $1280/ton threshold. In the event that the supplier reject our bids, we might postpone purchases to further date,” a buyer informed.