Asia Daily PP and PE Overview 4 January 2018

CHINA

• Import PP and PE surprisingly firmed up
• Near term outlook expected to remain firm

Polypropylene (PP)

Total PP and PE inventories at major domestic producers’ warehouses fell 40,000 tons to approximate 610,000 tons as of 4 January 2018, highlighting supplier’s ability in depleting stock on hand quickly to prevent any sales pressure. Purchasing activities are described as regular with buyers continue sourcing hand to mouth as current raw material costs are squeezing end product margins.

In the import market, offers below the $1160/ton mark have not repeated this week with lowest offers for dutiable cargoes reaches $1165/ton CFR China term. Vietnamese homo-PP emerged at $1240/ton with the same term, however, buyers are not showing much interest with a source said, “This level is same as local offers, hence it is very risky to accept. We need more consideration before making purchases as prices are too high now.”

Polyethylene (PE)

Overseas sellers started open fresh PE offers to China with increases. On an average, import HDPE film to China inched approximate $20/ton higher week on week while LLDPE film gained $10/ton, data from CommoPlast Price Index showed. This trend is expected to persist in coming weeks with limited supply and strong upstream costs remain the primary supporting factors.

Qatari producer is aggressive on their cargoes, introducing increases of $40/ton on LLDPE film and $20/ton. Price list stand at $1190/ton and 1200/ton respectively, all based on CFR Chia, LC 60 days. Several deals have been concluded without any further discount as market finds these prices to be more reasonable. “It might become more challenging to attract deals if further hikes taking place in the coming weeks. Buyers started showing reluctance in accepting higher prices,” a source close to the producer said.    

SOUTHEAST ASIA

• Import PP and PE witness moderate increases
• Purchasing power remains mediocre

Polypropylene (PP)

Only few suppliers opened fresh offers to the region with up to $40/ton increased compared to the pre-holiday levels. Purchasing interest is weak as buyers are still struggling to accept the latest hike. A regional trader offer import homo-PP to Indonesia at $1190/ton for Middle East origin and $1260/ton for Vietnamese cargoes, all based on CIF, LC AS term. However, Indonesian buyers are not very attracted citing more competitive offers available in local ground.

Meanwhile, Vietnamese buyers reported to have received $25/ton increased on Thailand homo-PP yarn offers at $1260/ton CIF, LC AS term. “We have comfortable stock until March, hence in no rush to make replenishment,” a converter said.

Looking at the current market situation, it is likely that overseas sellers might continue to implement small to moderate hike in the near term with solid support from the upstream propylene and energy complex.

Polyethylene (PE)

Major Saudi Arabia producer allocated additional quantity of HDPE and LLDPE film to Vietnam with $10-20/ton increased from previous week, bringing latest price list to $1310/ton and $1190/ton respectively, all based on CIF Vietnam, LC AS term. The producer quickly sold out HDPE film allocation without any additional discount. “Other producer would follow suite in lifting prices in the coming week,” a market source said.

The rebound in HDPE film market surprised many players who were expecting to see a more of stable to softer trend in January based on the sluggish demand condition. However, persistent limited supply, in additional to continued surging upstream ethylene costs have put more favor on seller’s side.