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In China, futures prices on Dalian Commodity Exchange weakened again today with contract 1609 for September delivery settled CNY74/ton ($13/ton) lower for PP and CNY130/ton ($19/ton) decreased for LLDPE. Both contracts closed at CNY8141/ton ($1042/ton without VAT) and CNY9115/ton ($1166/ton without VAT) respectively.

Physical spot market opened at CNY50-100/ton ($8-15/ton) higher for both PP and PE compared to yesterday as future trade performs better in the first half of the trading day. However, many sellers become more willing to negotiate on deal later as buyer’s confidence dampened further after Dalian Commodity Exchange settled at lower levels. Volatile future trading caused more caution among converters with a manufacturer in Fujian commented, “We plan to wait on the side-line till market direction become clearer. We think prices might remain stable in the near term, as sellers might not commit to large discount amid lacking sales pressure. However, any attempt to increase price would face stiff resistance from market.”

In the import market, homo-PP offers from dutiable origins have not changed for a week now while sellers are complaining about difficulties to conclude deals. A trader said, “Weakening Chinese Yuan and volatile future market are there to blamed for such sluggish buying interest. However, we think prices have yet to touch the turning point since on-hand inventories from international supplier is rather low. We are holding firm on our cargoes, hoping to achieve better margins in the near term.”

Import PE to the country remains limited and prices are still on the rise in spite of increasing resistant from buyer’s side, especially toward the offers at the upper end. A Shanghai trader offers Qatar LLDPE and LDPE film at $1190/t CFR China reported, “We have not been able to close deals at the new price as buyers are not interested in such high levels. Market is also waiting for Iranian cargoes to arrive, which is expected to ease the current tightness and might assist price reduction trend. We hope peak seasonal demand for LLDPE film from agriculture sector starting August to generate strong support for the market in the medium term.”          

In Southeast Asia, trading activities improved in line with the return of Malaysian and Indonesian customers from a weeklong holiday while overseas suppliers become more active in giving fresh offers. Most new prices emerged at stable to higher levels compared to last week; however deals concluded are mainly concentrated in the PE sector. A trader offers Indonesian LLDPE film at $1220/ton CIF Vietnam, LC AS term said, “Vietnamese buyers are still active in making purchases for LLDPE film since domestic supply is very tight at the moment. We managed to sell a very good quantity after agreed to $5/ton discount from initial price list, from which we believed that the market still has more room to move higher in the near term.”

Buying appetite for LLDPE film elsewhere in the region is not as stout as Vietnam, which players attributed to a more confortable supply condition. A trader offer Canada LLDPE film at $1200/ton CIF Indonesia, LC AS term said, “Our regular customers placed bid at as low as $50/ton lower, claiming more competitive domestic material is available. We have no plan to accept the bid prices since we are not having large allocation this week.”

Activities in the regional PP market have also witnessed improvement though the numbers of new offers are very limited, mostly with increases. Indeed, a major Thailand producer opened fresh prices to Indonesia with $40/ton hike compared to the pre-holidays levels to reach $1220/ton CIF Indonesia, LC AS term for homo-PP cargoes. Initial respond from market is less than optimistic as many buyers claimed to have sufficient stock to cover immediately need; and that they prefer to monitor further development before making decision.

The strong buying interest in Vietnam market is also ebbing with prices at the upper end of the overall price range are facing stiff resistance from buyers. A trader received Korean homo-PP injection at $1070/ton CIF Vietnam, LC AS term, some $10/ton higher than last week said, “We decided not to proceed with purchases in the lack of confidence in the near term outlook. There are many new offers emerge todays, mostly are deep-seas cargoes; however it might indicate a sign of gradual improved supply condition. Therefore, we remain cautious for now.”

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