Asia Daily PP and PE Overview 20 April 2018

CHINA

• Trading activities remain sluggish on the final trading day of the week 
• High import arrival keeps commercial inventories high 

Polypropylene (PP)

There has not been any major movement in the China PP market, both local and import ground. However, buying interest remains very much disappointed and once again many international sellers prefer to divert cargoes to other markets, where profit margins are better. “A recent site visit to our manufacturing customers underlining the psychological effect of the on-going trade tension between China and the USA. Most exporters refused to produce more than the pre-ordered quantity and that concern us,” a trader informed.

Polyethylene (PE)

Several deals for HDPE yarn have been reported in the range $1420-1430/ton CFR China, LC AS term for Thailand origin cargoes. Supply for this grade is especially tight among commodity HDPE grades as cargoes from Uzbekistan and India are still not available. A market source added, “HDPE cargoes originated Thailand, Malaysia and South Korea are all above the $1400/ton threshold. Prices are inflated to the previous highs and we think this is the price ceiling for this cycle.” 

In another news, import PP and PE arrival to China in March 2018 reached multi-month high levels at approximate 433,000 tons of PP and 1,340,000 tons of PE, preliminary import statistics from Chinese Customs department showed. Import HDPE to China in March surged 75% from February, reaching approximate 667,000 tons, which is half of the total PE imports for the month.

Sources blamed the heavy inflow of import cargoes for keeping the commercial inventories high and as mentioned earlier, this is the soft spot of the current market, which could prevent any further price increment.  

SOUTHEAST ASIA 

• Local Indonesia market continues to pick up 
• Middle Eastern PP suppliers plan further increases in the coming week 

Polypropylene (PP)

There are very limited trading activities in the import market on the final trading day of the week; however, a couple of Middle Eastern suppliers has expressed the intention to implement a small increase on the next offers. A supplier sold Saudi Arabia homo-PP at $1255/ton to Vietnam this week said, “We have sold a good quantity to Pakistan market at $1300/ton and therefore, our target price to Vietnam is $1265/ton in the coming week. Supply is tight while demand in the Indian Subcontinent is strong.” Vietnamese buyers are not responding very positively to the latest increases, which might continue to limit the upside of the market. 

Indonesian traders start seeing better transactions for PP today after a prolonged period of sluggish condition. “This is an initial sign and we need to monitor further before implementing any upward adjustment in prices. Thanks to a combination of stronger upstream cost, tighter supply from the Middle East and improved demand in the regional market, we hope to see better condition in local Indonesia,” a trader said. 

Polyethylene (PE)

Domestic LLDPE film market in Indonesia remains strong and compared to last week, the average prices have surged more than $50/ton. A major local producer implemented IDR460,000/ton ($33/ton) increased on LLDPE film cargoes from yesterday to IDR19,200,000/ton ($1389/ton) without VAT, FD Indonesia, cash term. “The maker withdraw the offers very shortly after the hike and we assume more increases shall emerge in the coming week,” a buyer added.

The stronger local ground has quickly spread the positive impact on the import ground, from which several international traders reported achieving ‘excellent’ sales this week. “We sold Indian LLDPE film at $1160/ton CIF Indonesia, LC AS term without much hassle. This is something that Indonesian market has not seen in a long time. The near-term outlook is rather bullish,” a source said.

In another news, another major Saudi Arabia producer announced May shipment offers for PE to Southeast Asia with $40/ton reduction from last month to $1200/ton for LLDPE film and $1380/ton for HDPE film, all based on CIF LC AS term. In spite of the large cut, the maker’s offers are still at the upper end of the overall price range and a source close to the producer said, “China is rather bullish and we would prefer to have better feelings about the market. In the meantime, we are putting $10/ton discount on the table for serious buyers, yet, we might eliminate this scheme if demand in China continues to pick up.”