Asia Daily PP and PE Overview 13 August 2018

CHINA

• Domestic supply to remain tight in the near term
• Weaker futures market drag spot homo-PP prices lower 

Polypropylene (PP)

The effect of weaker futures trading is cascading down the spot ground. In Eastern China market, suppliers have slashed homo-PP offers by up to CNY150/ton ($22/ton) from last week – a move that buyers deem necessary as the previous hike was too quick and without any support from the demand side.

However, domestic supply might remain tight in the coming weeks considering a number of major plants entering maintenance shutdown in August. “We were unable to stock up any volume due to the lack of cargoes in the local ground. At the moment, prices are too high and therefore, we only purchase hand-to-mouth basis. End product demand is not strong,” a converter informed. 

Polyethylene (PE)

Overseas sellers maintained latest price list on stable to slightly higher levels week-on-week with a limited quantity available. The latest tariffs on USA PE cargoes has somewhat purged one of the major competitors in this market and might allow other suppliers to take advantage of the reduced rivalry.

Middle Eastern LDPE film emerged at $1170-1180/ton CFR China, and LLDPE film at $1145-1200/ton with the same term.   

SOUTHEAST ASIA 

• Limited trading activities in the absence of new offers 
• Players raise concern over the near-term outlook for PE 

Polypropylene (PP)

There are very limited new offers observed in the market. Regional buyers are eagerly waiting for overseas sellers to open new prices and most expectations call for stable for slightly firmer levels. However, buyers become obviously cautious after news about the Turkish Lira depreciated 45 per cent against the US dollar that would affect import market negatively. Turkey is one of the key petrochemical importers in the world, importing 2.136 tons of PP in 2017. 

Polyethylene (PE)

USA PE cargoes are widely available in the spot market for both prime and off spec grades. Vietnamese buyers reported purchasing prime grade USA HDPE injection at $1110/ton and off-spec LLDPE film at $1060/ton CIF, LC AS term. 

Sources fear that these low costs cargoes might limit the market’s ability to regain its strength in the near term despite the robust upstream ethylene market. Ethylene cost based on CFR Northeast Asia is now at the highest level in nearly four weeks, at $1400/ton.