Asia Daily PP and PE Overview 16 July 2018

CHINA

• Limited movement in the PP market 
• Import LLDPE film rebounded slightly, sustainability in question 

Polypropylene (PP)

The Chinese PP market remains the tug-of-war between the lack of sales pressure and the weak demand condition during the traditional off-peak season. Such condition continues to discourage overseas sellers to allocate cargoes to this market, especially when other destinations could fetch better prices.

“Our customers only purchase materials to meet the immediate need. Local supply is tightening due to several unplanned shutdowns, however, we feel the market is losing the boost to advance further despite the strengthening in futures trading,” a trader said. 

Polyethylene (PE)

Import LLDPE film rebounded slightly after a large price cut in the previous week yielded satisfactory sales results and freed major overseas suppliers from inventories pressure. Import LLDPE film below $1100/ton threshold has not repeated this week while both Indian and Saudi Arabia parcels see $20/ton hike week on week. “The question is on the sustainability of the current trend,” a trader said, adding that fear over the intensified trade conflict between China and the USA has overshadowed other bullish aspects such as firming ethylene costs and brighter demand prospect. 

SOUTHEAST ASIA 

• Limited trading activities in PP market 
• Buyers await additional discounts despite stronger upstream ethylene costs 

Polypropylene (PP)

The first trading day of the week sees very thin activities. Major overseas suppliers have not opened fresh offers while buyers are still hoping to see some discounts given the recent drop in both energy complex and upstream propylene costs. News that Vietnamese buyers purchased Middle Eastern homo-PP injection at $1240/ton CIF, LC AS term has reinforced such expectation further.

“We receive offers for Indian homo-PP yarn at $1280/ton today and have not placed any bids at the moment while waiting for Middle Eastern suppliers to announce new prices. There is very high uncertainty in the PP market, and therefore, we prefer not to jump too quick into deals,” a buyer said.

Polyethylene (PE)

Indian LLDPE film cargoes emerge in Indonesia at $1130/ton CIF, LC AS and buyers here placed bids at $30/ton lower to match the China market. “We are unable to concede to such large discount now that China market has rebounded slightly. Supply for LLDPE film in local Indonesia market remains tight and with the escalated ethylene costs, we think the market is at the turning point,” a regional supplier said. 

In Vietnam, traders are facing tremendous difficulty in attracting deals, as buyers show no interest in making purchases regardless of the hike in the ethylene market. “The best bids we received for Middle Eastern HDPE film is $1320/ton. Our customers continue to hold wait-and-see position today,” an international trader informed.