Re-export PP, PE from China emerges in Vietnam; sentiment shrinks on outlook concerns

As post-Lunar New Year demand condition in China turned out to be weaker than expected, traders in the country are facing moderate inventories pressure, which wheel domestic prices lower constantly over the past week. As a result, many are seeking export markets to lighten warehouse space this week.

A number of re-export offers for various origins PP and PE cargoes are showing up in Vietnam and though the quantity is not very large, Vietnamese buyers are just too concern about the near term outlook to proceed with fresh buys. The logic is that if demand in China is not picking up, the spillover effect Southeast Asia might witness is just a matter of time.  

A buyer commented, “Offered prices, especially for non-Chinese origin homo-PP are high given the tight supply condition, however we are loosing confidence that market would remain firm in the coming week, hence prefer to wait on the sideline.”

Most re-export offers are concentrated on LLDPE and LDPE film as supply for these grades are relatively more comfortable in China than other materials. “Offers for re-export LDPE film are very competitive, which might pressure local Vietnam market in the coming days. This is not a good sign,” another buyer said.

The general sentiment in Vietnam has been quiet and overseas sellers, who have not completed selling March shipment cargoes, are now facing tremendous pressure. While several players are expecting the trading activities to improve in the near term as converter achieve regular operation rate, many are not having such optimism citing the up-coming off-peak season from the packaging sector.

Export and re-export offers received are shown in the following table: