Asia Daily PP and PE Overview 10 January 2018

CHINA

• Heavy snow affected local delivery
• Large price gap, strong Chinese Yuan encourage demand for import cargoes

Polypropylene (PP)

Total PP and PE inventories at major local producers’ warehouses fell another 20,00 tons from the previous day to approximate 600,000 tons as of 10 January 2018. It appears that spot traders are attempting to implement some increment of CNY50-100/ton ($8-15/ton) on homo-PP cargoes to local buyers following firmer trend in futures market, and respond is satisfactory.

There are very limited new offers observed in the import market with price range for dutiable origin remain at $1180-1200/ton CFR China, LC 0-90 days term.  

Polyethylene (PE)

More arbitrage traders are active in the spot PE market given larger price gap with futures ground. The number of transaction reported is rather good in spite of heavy snow condition that prevents smooth delivery process. In fact, China has shutdown a number of airports and highways due to unfavorable weather condition. Many logistic companies have notified customers regarding the earlier than usual Lunar New Year Holiday schedules.

In the import ground, deals for scarce Iranian HDPE film 7000F grade are reported at $1400/ton CFR China term. Meanwhile, Middle Eastern LLDPE film cargoes are sold at $1200/ton with the same term. Besides the pre-holiday replenishment activities, Chinese players are pointing to another support that is appreciated Chinese Yuan in recent weeks, which make it cheaper to buy cargoes in US dollars.

SOUTHEAST ASIA

• Import homo-PP firmed up
• Supply crunch left Indonesian buyers no choice but accept HDPE prices

Polypropylene (PP)

As expected, overseas sellers continue implementing another $10-20/ton hike on import homo-PP offers to Vietnam today, bringing latest prices to $1210-1220/ton CIF Vietnam, LC AS term for India and Saudi Arabia origin cargoes. No deals have been reported at the latest prices; however, suppliers are in no rush to offer discount. “We only have 200 tons of cargoes on hand. Most of buyers are placing bids at $20/ton lower, however we plan to hold firm. Supply is very limited while demand in China remains satisfactory, we believed that Southeast Asian buyers would gradually accept latest prices,” an international trader said.

Market sources are expecting the current firming trend in the upstream propylene costs to slowly cool down towards the end of this quarter with a number of new propane dehydrogenation (PDH) plants starting up in China. In the immediate term, very limited factor that could possibly drag market lower, sources said.

Polyethylene (PE)

Domestic traders in Indonesia are reporting to have achieved good number of deals for HDPE film cargoes at $1520-1530/ton, FD Indonesia, cash equivalent. Supply is very tight across the country and it appears that Indonesian buyers are not having other choices but to accept the current high prices to safeguard stock levels. “There is no doubt that the current trend would sustain into February,” a local trader said.

Meanwhile, international traders are receiving good number of inquiries from Vietnamese buyers, yet again most come from converters. High prices are shying local traders away as many refused to take price risk given unclear market direction in the post-Lunar New Year term despite firming local ground. “We only purchase in small quantity as we are in negative margin zone at the moment. If current high prices persist, we would only take back to back end product orders to reduce loses,” a HDPE bag converter said.