Asia Daily PP and PE Overview 9 July 2018

CHINA

• China – USA trade war steals the spotlight
• Import LLDPE film continue to gallop lower 

Polypropylene (PP)

There are very limited offers in the import market on the first trading day of the week, however, weakened futures trading affected the domestic spot market negatively. Major suppliers in Eastern China offered another CNY50/ton ($8/ton) discount with hope to smoothen sales process, yet converters are not very interested in large replenishment.

The trade splash between China and the USA remains in focus. Though the impact on the petrochemical industry has yet to form any clear shape, players are wary of the real actions on the second product lists – which consist of mostly crude oil, petrochemical and packaging products. 

“As a result, we continue to source material hand-to-mouth to avoid any price and inventories risks. Demand for our end product might only improve in August and until then, we prefer to stay on the sideline,” a PP woven bag converter said.

Polyethylene (PE)

Import LLDPE film continues to soften with special deals for Indian cargoes are seen at $1080/ton CFR China, LC AS term. Players reported that a there has been a total 20,000 tons of Indian cargoes sold this round at the price range $1080-1100/ton, which are meant to arrive in late August. 

In the meantime, deals for mainstream Saudi LLDPE film are done at $1120/ton CFR China, LC AS term, a $30/ton drop from the initial price list. Sources appear to believe that market has touched the floor price and less likely to witness any further reduction. “This is because we started seeing some buying interest from the mulch film converters while preparation for the Single Day sales shall begin soon. The only issue is that buyers are still reluctant with cargoes priced at the upper end of the overall range,” an international trader added.

SOUTHEAST ASIA 

• Import PP, PE remains on stable to softer track
• Near-term outlook expected to be bearish  

Polypropylene (PP)

Major Saudi Arabia producer reported having sold a good quantity of material on Saturday, 7 July 2018 to Vietnam at $1260/ton for yarn and $1250/ton for injection grade, all based on CIF, LC AS term. The reduction did not surprise buyers given the fact that non-dutiable materials have dropped just days before. “However, we remain cautious about large buy as the trade environment is not very favourable at the moment,” a converter reported.

Polyethylene (PE)

Import PE to Southeast Asia remains on the stable to softer trend and there have been reports regarding special deals for Saudi Arabia LLDPE film at $1140/ton CIF Vietnam, LC AS term. “Minimum purchased quantity at this price level is 500 tons and cargoes would only arrive in two months time. It is a bit risky considering the current market condition, however, we do hope to see a pick up in demand by late quarter 3,” a trader informed. 

A couple of other international producers have also expressed the bearish expectation for the remaining of July while planning to introduce small to moderate cuts in the near term. “Demand is very weak and coupled with the exchange rate issues, Southeast Asian buyers are just not in favour of import materials,” a Middle Eastern maker added.