Asia Daily PP and PE Overview 7 February 2018

CHINA

• Holiday mood blankets the market
• Official import homo-PP offers climb higher

Polypropylene (PP)

Official import homo-PP offers from several Saudi Arabia producers emerged at $20/ton higher from last month to $1240-1270/ton CFR China, LC 0 – 60 days term. Deals have been achieved at $1240-1260/ton with the same term given the lack of allocation.

Meanwhile, purchasing interest in domestic market started to weaken, resulted in slower inventories digestion rate. Total PP and PE inventories at major domestic producers’ warehouses fell only 15,500 tons from the previous day to 640,000 tons as of 7 February 2018. However, players have yet to take this as a bearish indication as many have sold good number of cargoes for post-holiday delivery.

Polyethylene (PE)

The PE market witnesses little changes with prices hold largely stable day on day. Suppliers are slowing down on selling effort, instead pushing for payment matter before banks are off. It is speculating that market might see more Singaporean PE cargoes this year after ExxonMobil started up new plant in Houston, Texas that aim to support demand in local USA, leaving Singapore plant more space to deal with Asian buyers.

SOUTHEAST ASIA

• Buying activities remains soft ahead of holiday
• Vietnamese buyers attracted to homo-PP cargoes below $1300/ton threshold

Polypropylene (PP)

There are very limited numbers of new offer observed in the market though a small quantity of Oman homo-PP appears in Vietnam at $1280/ton CIF, LC AS term, which attracted buying attention. The supplier managed to sell out all available containers without any discount given the fact that this price is already $30-40/ton below current market levels. At the meantime, offers above the $1300/ton to the country continue facing stiff market resistance.

Sluggish demand is observed in Indonesia market and import cargoes continue to remain at bay in the presence of competitive local prices. In fact, buyers are able to obtain material from domestic distributor at $1315-1325/ton FD Indonesia, cash equivalent, which make it difficult for overseas sellers to achieve hike target here.

Several major producers have already or going to shut PP units in February and March, including Thailand’s SCG, IRPC, HMC and Saudi Arabia’s APPC which might tighten supply further. However, the extent of any prospect price hike is very much depending on the demand condition in the post holiday term.

Polyethylene (PE)

Vietnamese buyers are speculating on the prospect of import HDPE film market citing a possibility that prices might reach the $1500/ton mark. Persistent tight supply and lack of import arrival are the main support for the bullish expectation. In addition, heavy steam cracker maintenance season in March might boost ethylene costs once again in the near term.

Rapid price increment in domestic Indonesia appears to have reached the peak as traders started offering larger discount from price list. Both HDPE and LLDPE film cargoes see IDR150,000/ton ($10/ton) drop week on week, yet buyers are still reluctant. “Our end product business is very weak, hence we prefer not to stock up cargoes at high price,” a converter said.