Asia Daily PP and PE Overview 19 March 2018

CHINA

• Local inventories surged less than expected after the weekend
• Import PP and PE continue to go south

Polypropylene (PP)

Total PP and PE inventories at major domestic producers’ warehouses piled up 55,000 tons throughout the weekend to approximate 995,000 tons as of 19 March 2018. While traders are making replenishment, most converters in the BOPP sector remain inactive amid lacking manpower and end product orders. “As a result, we continue offering up to CNY100/ton ($15/ton) discount to encourage purchases. The demand shall come back by April as the manufacturing season kick-start,” a trader said.

It is reported that China has exported about 30,000 tons of homo-PP in March, which lend a great hand in reducing inventories level in the local market. China Customs Department will only announce official data by late April.

In the meantime, import offers for Indian and Russian homo-PP are $20-30/ton lower week on week to $1200/ton CFR China, LC 0 – 90 days. Many overseas sellers are not interested in offering to China recently amid competitive local cargoes.

Polyethylene (PE)

After slashing offers in the previous weeks, suppliers for Saudi Arabia and Indian LLDPE film claimed to have sold considerable quantity at the new prices. “We are getting an additional discount for Saudi LLDPE film to $1150/ton CFR China, LC AS term and plan to proceed with purchases. Other suppliers might have no choice but to jump on the wagon,” a buyer commented.  

SOUTHEAST ASIA

• The market remains stable to soft
• Surging ethylene costs yet to spur the sentiment in PE market

Polypropylene (PP)

After cutting import offers in the previous week, most major suppliers are returning to the usual pace on the first trading day of the new week by opening new prices at the levels before the cuts. It is not ready to accept a rebound, as sentiment remains weak across the region. “However, we have depleted approximate 1000 tons of Middle Eastern homo-PP at $1260/ton, mostly to Indonesia over the past week, and currently free from any sales pressure. We hope market has regained its strength,” an international trader lifted new offers by $10/ton said.

Polyethylene (PE)

A minor reduction is observed on the limited number of new HDPE film offers in spite of a sharp hike in the upstream ethylene costs. Buyers are putting more concern on the slow recovery in demand in the nearby China market, which undermines the positive effect of a cost-push on prices. “We are having two months worth of inventories. The market is going through a price correction period and we prefer to hold a wait and see stance,” a Vietnamese converter received offers for Uzbekistan HDPE film at $1360/ton CIF, said.

Similar to other major markets in the region, local LLDPE film in Indonesia is facing tremendous pressure from persistent weak demand. Traders in the country have sold locally produced cargoes at approximate $1280-1285/ton without VAT, FD Indonesia, cash term. “It is tough, especially for dutiable cargoes to enter Indonesia at the moment. We have yet to deplete cargoes for March shipment,” an international trader informed.