Asia Daily PP and PE Overview 23 January 2017

CHINA

• Local buying appetite steady as supplier offers room for negotiation
• Persistent supply shortage continue pushing import HDPE film higher

Polypropylene (PP)

In spite of the fact that holiday is drawing near, purchasing interest in local market remain steady as traders are putting up effort to keep demand in place by giving discount on deals. Total PP and PE inventories at major domestic producers’ warehouses fell 30,000 tons to approximate 615,000 tons as of 23 January 2017. “However, sentiment might continue to weaken in the coming days as many of our customers are completing pre-holiday replenishment,” a trader commented.

In the import market, it appears that prices are entering a stabilizing stage as most offers for regular cargoes from India and Middle Eastern remain in the range $1220-1230/ton CFR China, LC 0-90 days term. This is the second week in a row that import offers have not changed. “Our Saudi producer are discussing sell idea at $1240/ton for homo-PP yarn, however we do expect a small discount,” a buyer said. At the meantime, India’s MRPL sold new PP cargoes at $1210-1220/ton CFR China term.

Polyethylene (PE)

Traders are offering import HDPE film originated from Thailand and South Korea at $1420-1430/ton CFR China term with very limited cargoes available. At the meantime, Iranian HDPE film emerges at $1390/ton with the same term. A buyer attempted to bid for $20/ton lower to close deal, said, “Our supplier refused to give any discount citing the supply shortage. We might proceed with purchases thought prices are too high now.”

Northern China companies are rushing for delivery as weather forecast heavy snow in the next few days. “ And therefore, our customers in the mulch film sector are still buying to assure safe inventories levels before logistic companies take off for holiday,” a trader reported. This might keep the sentiment steady for the week being. 

SOUTHEAST ASIA

• Duty-free homo-PP concluded at higher in Vietnam
• Overseas seller aim to lift February PE prices

Polypropylene (PP)

After much resistance, Vietnamese buyers have accepted the fact that import homo-PP are nowhere nearing the peak, not even excluding a possibility of continued firming trend in the post Lunar New Year term. Philippines homo-PP yarn cargoes therefore, achieved deals in this market at $1300/ton mark, a $15/ton reduction from initial price list. “We are left with no choice but to make replenishment. Supply is tight and we are concern that the current trend might persist in the near term,” a converter said.

The much sluggish Indonesian market is also firming up, just yet, in a slower pace. Middle Eastern cargoes emerge at $10/ton higher week on week at $1225/ton CIF Indonesia, LC AS term while duty free Malaysian cargoes remain at $1280/ton with the same term. “Domestic distributors also implemented IDR400,000-500,000/ton ($30-37/ton) compared to last week’s done-deal. We plan to source come quantity from local market as the supply tightness might persist,” a buyer commented.

Polyethylene (PE)

The unfortunate explosion at IOCL’s naphtha cracker renews market concern that upstream ethylene and propylene costs might extend the journey north in just matter of day. The cracker with annual capacity 800,000 tons/year of ethylene and 600,000 tons/year of propylene has been shut indefinitely, sources said, for safety inspection. As a precaution, the company also reportedly shut its   

Meanwhile, after a major Saudi Arabia producer lifted February shipment offers for PE considerably in the previous trading day, other suppliers are looking into implementing similar hike. With such movement taking place, import HDPE film below the $1300/ton threshold have totally disappeared and dutiable cargoes are reaching near to the $1400/ton mark. “We are planning to offer HDPE film at $1400/ton to Southeast Asia given the lack of allocation. Buyers might resist, however, we have no plan to offer any large discount,” another Saudi producer added.