Asia Daily PP and PE Overview 10 July 2018

CHINA

• Local sentiment seems improved 
• Import PP and PE remains on the softening trend

Polypropylene (PP)

Thanks to the stronger futures market, sentiment on the spot ground seems improved visibly compared to the first trading day of the week. Total inventories at Sinopec and CNPC’s warehouses fell about 40,000 tons day-on-day to approximate 720,000 tons, however, sources are not confident about the sustainability of the current trend. “We have to watch out for further development as the trade war effect has yet to subside. One thing is that we are returning to the home market instead of pushing cargoes to the export ground now,” a trader commented.

In the import front, there are very limited new offers except for a couple of deals for Indian cargoes at $1230/ton CFR China, LC AS term, a $20/ton drop from last month.

Polyethylene (PE)

Major Thailand and Taiwan producers have all stepped back on import HDPE film to China this week, sending the latest price range for these two origins to $1355-1360/ton CFR China. Weaker demand is now ahead of the supply tightness for this grade, which might keep the sentiment soft in the near term, market sources said. 

SOUTHEAST ASIA 

• Import HDPE film market plunged to multi-month lows 
• Weak sentiment as trade wars effect lingers 

Polypropylene (PP)

Chinese coal-based PP fell to $1250/ton CIF Vietnam this week while Nghi Son Refinery & Petrochemical (NSRP) started offering commercial cargoes to Indonesia at $1310/ton CIF, LC AS term. Southeast Asian buyers acknowledged that pressure on the PP market is clear, including weak demand amid the traditional slow season, depreciation of the local currencies and improving supply from new capacities. 

Meanwhile, major suppliers in Indonesia continue forward selling scheme for August delivery at IDR18,800,000/ton ($1310/ton) without VAT, FD Indonesia, cash equivalent. Such scheme continues to discourage Indonesian buyers from taking non-dutiable cargoes from the import market would prices above the $1300/ton threshold, based on CIF, LC AS. “We are still bidding at $1280/ton for Vietnamese homo-PP yarn and currently waiting for supplier’s feedback. The domestic market is competitive and therefore, we hope to obtain compatible prices from overseas sellers,” a buyer added. 

Polyethylene (PE)

Import HDPE film to Vietnam plunged to multi-month low levels, marked by the deals done for Kuwait cargoes at $1320/ton and Thailand cargoes at $1330/ton, all based on CIF Vietnam, LC AS term. Traders are complaining that deep-seas cargoes priced above the $1350/ton threshold are now facing tremendous difficulties to attract deals as buyers have developed a benchmark in negotiation. 

“We fear that market might extend the weakening trend in the coming weeks as we heard that the crash in HDPE pipe market has encouraged a couple of major producers to switch to film grade. The heightened trade war between China and the USA might cut deeper into the market would the second list of target products face the tariffs,” a buyer commented.