Asia Daily PP and PE Overview 11 June 2018

CHINA

• Limited movement in both local and import ground
• Near-term outlook remains cloudy 

Polypropylene (PP)

September delivery contract for PP on Dalian Commodity Exchange surged CNY121/ton ($19/ton) from the previous trading day to the highest levels since the end of January 2018. Spot market remains pretty calm mostly due to arbitrage traders are not having sufficient time to respond to the latest development, “However, we think spot transactions might be better in the next trading day if futures market hols strong,” a trader said.

In the meantime, the recent flood in Southern China, where most major converters in the flexible packaging sectors are located, might affect real demand to a certain extent. “Market outlook is rather cloudy. And a number of PP plants that scheduled to shut down in July might have limited impact on the market as weak demand balance up the condition,” a source added.

Polyethylene (PE)

The PE market has not seen any major movement while buyers are mostly awaiting fresh offers from overseas suppliers. Chinese traders are re-exporting LDPE film cargoes to South America markets amid lengthy local supply. “Yet, the re-exported quantity is rather small and might not be sufficient to stimulate local market. More cargoes need to be shipped out,” a trader said.  

SOUTHEAST ASIA 

• Demand for LLDPE film remains strong in Indonesia ahead of Ramadan 
• Limited PP offers, buyers hold strong hope for reduction

Polypropylene (PP)

There are very limited new offers observed on the first trading day of the week and regional buyers remain hopeful that some minor to moderate discounts would emerge in the coming weeks as demand gradually subside ahead of the Ramadan holiday. Market also eagerly awaits the startup at Vietnam’s Nghi Son Refinery & Petrochemical, Malaysia’s Lotte Chemical Titan and South Korea’s S-Oil Corporation, which might east the current tightness to a certain extent.

On the other hand, suppliers are not having a single thought of down adjusting prices citing the shutdown at Thailand’s HMC and Singapore’s TPC that might limit availability. “The futures market in China surged drastically and we are watching out for signs of demand improvement. We expect the market to hold steady throughout the holidays given that Middle Eastern cargoes are still very tight,” an international trader informed.  

Polyethylene (PE)

Purchasing interest for LLDPE film in Indonesia is surprisingly healthy just days before the Ramadan celebrations. “We managed to conclude Saudi LLDPE film at $1190/ton smoothly on the first trading day of the week and only a couple of large-scale buyers in Medan are asking for discounts. Local supply is short and even buyers without BMDTP are accepting dutiable cargoes,” a trader reported.

As reported earlier, Indonesian buyers rush back to the market to make last-minute replenishment after both domestic producers unexpectedly shutdown LLDPE lines due to unspecified issues. Such development is likely to keep local supply tight even in the post-holiday term.