Asia Daily PP and PE Overview 23 November 2018

CHINA

• Plunged in futures trading pushes spot market lower
• Bleak outlook encourages re-export activities 

Polypropylene (PP)

The January delivery contract for PP on Dalian Commodity Exchanges loses nearly $60/ton on Friday alone no thanks to the turmoil in the global equity market. The plunge in futures trading together with the piling up in local inventories is now the dual force hampering the market sentiment. Buyers decided to withdraw to the sideline in expectation of further decreases in the near term.

Meanwhile, suppliers are diverting cargoes to other markets with hope to deplete the inventories quicker. A local producer offer export cargoes at $1150/ton FOB China to Southeast Asian buyers and yet to receive any response. “Outlook is rather bleak. We are looking at other export destinations now,” a producer source added. 

Polyethylene (PE)

Traders are forward selling Saudi LLDPE film (Mi – 1 grade) at $980/ton CFR China, LC AS term signaling the continued loses confidence among sellers here. Converters are taking time to negotiate for better prices knowing that suppliers would give softer stance now.

“We think the market is nowhere nearing the bottom yet. Demand for our end product is regular, but we prefer to take a cautious stance for now,” a buyer informed.

SOUTHEAST ASIA 

• December shipment offers emerged at reduction
• Re-export cargoes from China emerge concern buyers further 

Polypropylene (PP)

As import market continues to decline, the regional sentiment receives another pinch as Chinese traders started offering re-export homo-PP cargoes following the steep plunge in this market. In fact, prompt Indian homo-PP yarn from China bonded warehouse emerges at $1165-1175/ton CIF Southeast Asia, LC AS term on the final trading day of the week.

To many buyers, this only depicts the sluggish condition in China market and the lack of confidence in the near term market outlook here. “We decided to curl-tail all purchasing activities for now. Sales pressure is mounting and very likely that prices would reduce further,” a regional buyer commented.

Polyethylene (PE)

A major Saudi Arabia producer pioneer price cut for December shipment by up to three digits in value for HDPE and LLDPE film to Vietnam and Indonesia, sending the latest price list for HDPE film to below $1150/ton threshold, at $1130-1140/ton CIF, LC AS.

It is expected that more producers would follow the trend given the slow market condition across the region while the Bear dominates the energy complex. Regional buyers are hoping to see the import HDPE film to reach the $1100/ton mark in the coming days.