Asia Daily PP and PE Overview 24 August 2018

CHINA

• Plunging futures market undermines hiking effort in import homo-PP
• Higher import LDPE film encounters stiffer resistance 
• Iranian cargoes face no shipping issue, payment to be set in RMB

Polypropylene (PP)

Import offers for Saudi Arabia homo-PP yarn at $1240/ton CFR China, LC AS term, are no longer available on the final trading day of the week. The producer reportedly withdrew the offers and replaced with $20/ton hike to $1260/ton. No immediate deals are reported. 

The maker claimed limited availability, however, the intense correction that taking place on Dalian Commodity Exchange is preventing buyers from accepting the increases. “There are too many risks and without any apparent improvement in demand, we prefer not to rush into a new deal,” a buyer commented.  

Polyethylene (PE)

Chinese buyers started showing stiffer resistance towards the continuous firming trend in the import LDPE film offers. “We are unable to achieve deals at $1170/ton CFR China, LC AS for Saudi Arabia. Import market is losing competitiveness against the local ground and any additional hike would slow down demand even further,” a trader commented.

In another development, Chinese buyers are negotiating with Iranian suppliers to settle payment for imported cargoes from Iran in Chinese Yuan after the USA revive economic sanctions on this country. “We have checked with authorities in China main Port, South Korea, Japan, Singapore, Taiwan and Hong Kong, there is no restriction on Iranian cargoes. The only issue we need to resolve is the payment method and we are discussing with buyers at the moment,” an Iranian trader informed in an interview.  

SOUTHEAST ASIA 

• New PP, PE offers emerged at higher levels 
• Buyers show strong resistance towards the new hikes

Polypropylene (PP)

The regional PP market remains largely unchanged from the previous trading day and very limited number of deals reported. Major Saudi maker lifted homo-PP yarn to Vietnam in the previous trading day to $1270/ton CIF, LC AS term refused all lower bids citing the lack of inventories pressure. 

“Trade war might escalate since the meeting between China and the USA yield no positive results. We are not confident enough to accept the current prices, especially other traders have already concluded Indian cargoes at below $1250/ton mark,” a buyer said.

Polyethylene (PE)

A Saudi Arabia producer lifted September shipment LLDPE film offer to Vietnam and Indonesia by $40-50/ton from last month to $1180/ton while maintaining HDPE film at $1320/ton with the same term. Regional buyers are asking for $20-30/ton discounts with a source said, “The hikes are too drastic. We are placing bids at the same levels as a major Thailand producer sold earlier this week. In the meantime, we are waiting for other Middle Eastern suppliers to announce new offers,”

In Indonesia, the government is proposing to levy HDPE bag starting 2019 based on the two categories namely plastic bags that are environmentally friendly and which are not. No exact levy rates were revealed at the time this report is published, however, players are watching out for the next announcement.