Asia Daily PP and PE Overview 13 July 2018

CHINA

• Mulch film converters seem more active in the Northern area 
• Limited transactions in the import market, offers remain on stable to softer track

Polypropylene (PP)

Sources complained that transactions for homo-PP in the local ground are much weaker than LLDPE film despite the constant firming up in the futures contracts. This is because many converters are still struggling to cope with the weak end product orders amid the off-peak season, “We are not seeing many offers in the import market yet, and therefore, less of at least one pressure point,” a trader commented.

In fact, import offers are limited in the range $1230-1240/ton for Saudi Arabia and Indian cargoes, all based on CFR China. These offers are deemed more expensive than the current local prices, hence very few buyers committed to these businesses.   

Polyethylene (PE)

Traders in Northern China market continue seeing a slight improvement in purchasing interest among mulch film converters although the traditional peak demand season is still weeks away. Deals have been materialized at CNY50-100/ton ($8-16/ton) hike from the previous trading days with a trader said, “However, our customers are still looking at the lower end of the overall price range while showing little interest for the upper-end cargoes. The demand shall continue to improve in the near to medium term.” 

In the import market, Chinese buyers remain reluctant to accept USA materials fearing the trade tension between the two countries would worsen. Meanwhile, Indian LLDPE film achieved deals at $1100/ton CFR China, LC AS term for August shipment, a $10-20/ton increased from last week.

SOUTHEAST ASIA 

• Selected import homo-PP cargoes to Indonesia inched lower 
• Weak demand persistently pushes local prices lower in Vietnam 

Polypropylene (PP)

After much resistance, a couple of overseas sellers has stepped back on import homo-PP offers to Indonesia, signifying the softening trend. Deals for Saudi Arabia homo-PP yarn and injection are reported at $1260/ton CIF Indonesia, LC AS term and market sources are expecting other producers to follow suit in the coming days. “Other Middle Eastern makers are still insisting on the lowest level at $1270/ton, which we find not too attractive. We are monitoring the development in other markets in the region to gauge the possible market trend in the coming week,” a buyer informed.

In another development, Vietnam’s Nghi Son Refinery and Petrochemical (NSRP) is achieving stable production rate and approximate 500 tons of export yarn cargoes have reached Indonesia this week at the price range $1280-1290/ton CIF term. Meanwhile, woven bags manufacturers in Vietnam have tested the material and achieved a satisfactory quality result. At the moment, domestic offers for the cargoes stand at VND33,200,000-33,400,000/ton including VAT ($1308-1316/ton without VAT) FD Vietnam, cash equivalent.    

Polyethylene (PE)

The domestic market in Vietnam extended the softening trend toward the weekend, with several traders slashed prices by as much as VND400,000/ton ($17/ton) compared to earlier this week despite the depreciation of the local currencies. Locally held LLDPE film is traded at VND29,800,000-30,500,000/ton ($1173-1201/ton without VAT) and HDPE film at VND34,200,000-34,800,000/ton ($1347-1370/ton without VAT), all based on FD Vietnam, cash equivalent.

Explaining the situation, several sources are pointing to the persistently weak demand amid the traditional off-peak season, while falling international market is putting tremendous pressure on local traders. “Purchasing interest is very weak and converters only make small inquiries to maintain the payment term. Fear of the escalated trade war between China and the USA is too strong and we are not confident about the near-term outlook,” a trader said.