Import PP, PE to Vietnam rebound, how is marketing responding?

Import PP and PE market in Vietnam firm up visibly this week thanks to stronger energy complex and upstream ethylene and propylene costs. On an average, import prices have increased approximate $25/ton for HDPE film, $20/ton for LLDPE film and homo-PP, CommoPlast data showed. 

The increases in prices, however, have been translated into slower purchasing interest as buyers are not convinced about the sustainability of the trend, from which many withdrew to the sideline temporarily.

In the PP market, Middle Eastern suppliers are very aggressive in lifting offers thanks to the lack of inventories pressure. Although prices list for this origin has reached $1260-1300/ton CIF Vietnam, LC AS term this week, deals are observed at $1250-1255/ton with the same term. “We did not participate in any purchases this week as it is traditional low demand season for woven bag sector. In the meantime, we have replenished comfortable inventories until early June, and therefore, we prefer to adopt and see stance at the moment,” a converter said.

One of the factors that limit the upside of the import homo-PP market is widely available for non-dutiable cargoes including those originated from Indonesia, Philippines and Thailand at $1270/ton CIF Vietnam, LC AS term. “We have reduced the purchased quantity of dutiable cargoes considerably and started replacing with the competitive duty-free materials. The market is not having strong support for any significant rise,” another converter added.

In the PE sector, suppliers whose offers stood at the upper end of the overall price range in the previous month started cutting May shipment offers, while others are attempting to implement a moderate hike believing that prices have found its bottom at $1140/ton for LLDPE film and $1310/ton for HDPE film. A couple of Saudi Arabia and Thailand PE cargoes witness $40/ton increased this week, though clearly, suppliers are unable to achieve the full hike. 

Thailand LLDPE film concluded at $1185/ton CIF Vietnam, LC AS term, a reduction of $35/ton from the initial prices. “We have purchased more than 2000 tons of PE cargoes over the past two weeks, and at the moment, have no intention to make additional buys. The local market is very weak, which merely support any major increases,” a local trader informed.

In contrast, players generally accepted the fact that HDPE market would remain above the $1300/ton threshold in the near term amid tightened supply. Availability might not ease anytime so soon now that many overseas producers have switched to making HDPE pipe grade for healthier margins. “For the month of May and June, we expect only small fluctuation in HDPE prices as weak demand during the off-peak season would balance the limited supply. In the meantime, we are monitoring the development in quarter 3, as USA cargoes might start to emerge,” another market source commented. 

To recap, import PP and PE to Vietnam has rebounded up and might persist in the stable to firmer track in the near term with the support of strong upstream costs. However, the market is not responding very positively to the current market levels due to weak end product demand and comfortable on-hand inventory. This could limit the extent of price increment in the weeks to come.