Asia Daily PP and PE Overview 30 March 2018

CHINA

• Domestic inventories continue to fall on improved demand
• Import LLDPE film might be nearing the bottom

Polypropylene (PP)

Total PP and PE inventories at major domestic producers’ warehouses fell another 20,000 tons day on day to approximate 830,000 tons as of 30 March 2018. This continues to highlight the healthy demand condition in the local ground that has been taking place since earlier this week. Such development finally lends sufficient support to local suppliers to implement CNY50-100/ton hike on spot prices. Latest offers for homo-PP in Eastern China stand at CNY‎‎‎8600-8650/ton ($‎‎1172-1179/ton without VAT), EXW China, cash equivalent.

Import market remains relatively stable after a Saudi Arabia producer slashed prices in the previous trading session. A stronger local market is narrowing the price gap between import and local cargoes, which might help in preserving a stabilizing trend in the near term.

Polyethylene (PE)

Import LLDPE film to China might be nearing the bottom, sources said, given active purchasing activities throughout the week. However, it appears that suppliers’ main intention was to deplete inventories instead of steering the market higher, which explains the fact that no immediate upward price adjustments are seen over the past five trading days.

“We purchased few thousand tons of Thailand LLDPE film at $1230/ton CFR China, LC AS term this week. We found these cargoes competitive and there is a chance that overseas supplier might lift offers in the coming weeks,” a buyer said.

SOUTHEAST ASIA

• Saudi major slashed PE prices sharply to Vietnam
• Limited transactions for homo-PP, further reduction is expected

Polypropylene (PP)

There are very limited transactions on the final trading day of the week though there have been market talks that Saudi Arabia homo-PP concluded at $1210/ton CIF Vietnam, LC AS term. “It is very difficult to attract buying interest in Southeast Asia at the moment, as buyers are mostly hoping to see prices below the $1200/ton threshold,” a trader said.

Domestic markets across the region including Indonesia, Vietnam and Malaysia holds soft. In fact, major Malaysia maker slashed homo-PP prices by MYR200/ton ($52/ton) from last month, just to find demand is temporarily unmovable. “It is not better in local Vietnam. Traders are rushing to liquidize on-hand inventories as import market extended to softening trend. This is making the matter worse,” a trader added.   

Polyethylene (PE)

The market condition has been really unfavourable for Southeast Asia PE sector and as a result, a major Saudi Arabia producer stepped back $40/ton from the initial HDPE and LLDPE film price list, bringing the adjusted prices to $1310/ton and $1150/ton respectively, all based on CIF Vietnam, LC AS term. This move is much unexpected, however, the market started responding to the prices. “With China market resumes purchasing activities, we think the market is already nearing the bottom. Therefore, we decided to make some replenishment at the new prices,” a buyer commented.

From another angle, a couple of international traders is planning to lift import LLDPE film offers $10-20/ton higher in the coming week considering brighter market outlook in the near term. “However, the plan might not work out as soon as expected if Saudi LLDPE film continues to be transacted at $1150/ton level in the coming week. We might need to monitor further before rushing into any decision,” a trader source added.