Asia Daily PP and PE Overview 28 February 2018

CHINA

• Domestic inventories fell below the 1 million tons threshold
• Import PP hold firm while LLDPE film witness discount

Polypropylene (PP)

Total PP and PE inventories at domestic producers’ warehouses fell nearly 70,000 tons to approximate 920,000 tons as of 28 February 2018. While the number looks very much optimistic, traders are reporting an actual situation that monthly allocations are due to collect and traders must transfer the stock to their own warehouses before the month end. “At the meantime, we have pre-sold some quantity for March delivery and therefore, the situation is not alarming. We hope market would be more active after the Chap Goh Mei,” a trader commented.

In the import ground, Saudi Arabia materials are offered in the range $1270-1300/ton CFR China, LC 0 – 60 days term, as suppliers claimed having very limited quantity. These prices appear not so attractive to buyers, especially when domestic cargoes are traded in Eastern China in the range CNY‎‎‎‎9000-9100/ton ($‎‎‎1215-1229/ton without VAT), EXW China, cash equivalent.  

Polyethylene (PE)

Import LLDPE film seems to be soft with Middle Eastern cargoes traded at $1220/ton CFR China while Indian material at $1190/ton and non-dutiable cargoes from Thailand at $1275/ton with the same term. It appears that Chinese buyers are loosing appetite for import material, reflecting in the fact that deals are limited in spite of lower prices.

“We hope this condition is temporary as many buyers would only return after the Chap Goh Mei festival. We have yet to make any major adjustment this week though sales have been slow,” a source informed. 

SOUTHEAST ASIA

• More overseas suppliers lifted March shipment offers
• Purchasing activities remain weak on falling market confident

Polypropylene (PP)

Though overseas suppliers are announcing fresh offers for March shipment, it appears that sellers are not aggressive in pushing cargoes out amid sluggish purchasing interest across Southeast Asia. This is due to the fact that overall supply remains very much limited with major plants in Saudi Arabia and Thailand are entering maintenance shutdown season. The tug of war is intense, just yet, player believed that the import PP market has reached the peak and likely to follow stable to softer track in the near term.

While couple of overseas suppliers have stepped back on homo-PP offers to Indonesia by $10-20/ton week on week; import offers to Vietnam mostly hold above the $1300/ton threshold. Then number of deals observed are very thin, with an international trader offer Saudi homo-PP yarn at $1310/ton CIF Vietnam, LC AS term said, “We have reduced the offers by $10/ton from initial price list and our customers are still showing little interest. We continue to invite for bid and might finalise deal prices later.”

Polyethylene (PE)

Import offers for Middle Eastern HDPE film to Southeast Asia remain above the $1400/ton mark this week, regardless of the recent fall in ethylene costs. “Many of our customers are loosing confident in the near term market outlook, hence refrain from making purchases at the current market level,” a distributor reported.

In fact, a Saudi Arabia maker offered $20-30/ton discount on deals for HDPE film, bringing final prices to $1420-1430/ton CIF Vietnam, LC AS term, yet many buyers are very reluctant. “Our end product business is suffering very badly due to high raw material costs and weak demand. We have not made any replenishment from import market this week,” a converter commented.