Asia Daily PP and PE Overview 2 April 2018

CHINA

• Local demand remains healthy; prices might near the bottom
• Satisfactory sales in the previous week alleviate inventories pressure on LLDPE sellers

Polypropylene (PP)

Total PP and PE inventories at major domestic producers’ warehouses rose to 920,000 tons from last Friday, however, it does not affect the purchasing interest among market participants. Traders are describing today as the best trading day since they resumed working after the Lunar New Year holiday. “We implement CNY50-100/to n ($8-16/ton) hike on the latest offers and manage to deplete good quantity. The market is very near the bottom, though we remain pessimistic about any large rebound,” a trader said.

Polyethylene (PE)

Domestic PE market is witnessing similar situation, yet sources fear that this trend might not sustain, especially with the agricultural film season coming to an end. Import market is quiet, though it appears that overseas sellers have depleted considerable quantity of LLDPE film in the previous week, with most Middle Eastern cargoes concluded in the range $1130-1150/ton CFR China, LC 0-90 days term.

In another news, China has officially implemented the first stage of the reciprocal tariff of 15% on import fresh fruit, dried fruit and nut products, wine, modified ethanol, American ginseng, and seamless steel pipes from the USA. No other petrochemical products are included in the list, suggesting that the industry is temporarily being spared from the trade tension between the two world economies. However, players are taking a cautious stance, fearing that other tension might emerge in the coming months.

SOUTHEAST ASIA

• Chinese PP move higher on improving local ground
• More maker concede to price cut on PE cargoes

Polypropylene (PP)

Import homo-PP from China inch higher on the first trading day of the week, which comes in no surprises considering the strong buying interest in domestic China market throughout the past week. Coal-based homo-PP yarn stand at $1280/ton while regular cargoes are at $1300/ton, all based on CIF Vietnam, LC AS term. “Demand in local Vietnam is very slow and it appears that a number of traders are liquidizing inventories on hand, causing huge chaos when it comes to prices. We are hoping to see some adjustments from overseas sellers before making replenishment,” a source said.

Meanwhile, several regional suppliers have expressed the intention to down-adjust import homo-PP prices in the coming days amid disappointing sales results to Indonesia in the previous week. “And with a major local producer cut official price list further, it would be a big challenge for import marker to compete. Therefore, a reduction becomes unavoidable,” a producer said.

Polyethylene (PE)

There is very few PE offers observed, however, it appears that other suppliers are entering an imminent path of cutting prices after a major Saudi Arabia producer conceded to $40/ton reduction on HDPE and LLDPE film in the previous week. “We are collecting bids for Kuwait HDPE film at $1300/ton and yet many customers are not interested. The recent uptick in demand in China has yet to show effect, though we do expect better condition ahead,” an international trader reported.