Asia Daily PP and PE Overview 23 March 2018

CHINA

• Local sentiment might improve in 2Q ahead of maintenance shutdown season
• Import homo-PP plunged to multi weeks low

Polypropylene (PP)

Total PP and PE inventories at major domestic producers’ warehouses fell nearly 30,000 ton to approximate 900,000 tons as of 23 March 2017, thanks to improved futures trading in the past two sessions. However, sentiment takes a nosedive on the final last trading day of the week on concern over the trade war between China and the USA. Local spot market sees CNY100-200/t ($16-32/t) reduction day on day to CNY8350-8950/ton ($1128-1207/ton without VAT) EXW China, cash equivalent.

Import Indian homo-PP fell to the lowest level since the third week of January at $ $1170-1180/ton CFR China, LC AS term, June arrival. Deals have been materialised at $1170/ton, sources said, adding that Middle Eastern suppliers have yet to implement such reduction.

Polyethylene (PE)

Buyers in the PE sector are putting up heavy concern over the trade tension between China and the USA and several sources have expressed the intention to purchase more quantity from the local ground to avoid shipment risk. In the meantime, domestic inventories pressure might ease in the coming month given heavy maintenance shutdown schedule at local plants from April to July.

Import arrival in February fell drastically from the previous month, initial data showed, and this could help to ease inventories pressure to a certain extent. “USA cargoes might temporarily be less attractive amid the trade tension. We are monitoring further development, however, the market is gradually digesting the stock,” a buyer commented.

SOUTHEAST ASIA

• Sentiment plunged on the final trading day of the week
• Players refused to build inventory, expected more price cuts to emerge

Polypropylene (PP)

There are very limited transactions reported on the final trading day of the week and most suppliers refused to cut prices in larger range despite weak sales results. In this intense tug-of-war, buyers seem to have an upper hand in the negotiation, with a major Saudi Arabia producer commented, “Market is very quiet. We have not received any attractive bids from customers and with others have stepped back on the offers, we might need to follow the trend.”

Philippines homo-PP concluded in Indonesia at $1290/ton CIF, LC AS term, $30/ton below the initial price list, which challenge other Southeast Asian producers, who are attempting to maintain offers above the $1300/ton threshold to this market. “We are not very interested in import cargoes since local material remains more competitive. We think there is still room for further reduction,” a converter commented.

Polyethylene (PE)

Import offers across the region are generally soft. Buying sentiment is affected negatively by the outbreak trade war between world powers – the USA and China. There has not been any clear indication on weather petrochemical industry would be directly impacted by the trade conflict, however, many traders plan to keep low inventories for the worst case scenario.