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In China, futures prices on Dalian Commodity Exchange fell four straight sessions today for both PP and PE contract, January delivery. Indeed, PP futures dropped CNY52/ton ($8/ton) from yesterday to settle at CNY7224/ton ($924/ton without VAT) and LLDPE futures inched down CNY40/ton ($6/ton) to reach CNY8735/ton ($1118/ton without VAT).

Continuous falling futures prices has shaken seller’s stand, from which domestic spot offers for both PP and PE recorded first loses this week, coming down CNY50-100/ton ($8-15/ton). However, LDPE film extended a gain of the same amount. Demand is reported to be weak, considering the absence of buyers in eastern China area and also falling energy and futures markets. This is reflected in the increase in local inventories at major producers’ warehouse this week.

An alarming activities observed in local China this week is that several traders have been conducting forward selling domestic homo-PP cargoes for December delivery, at the price levels not much different from the futures prices today. A trader from Zhejiang said, “The effect is that buyers might not gather enough confidence to stock up material even though the market has entered the peak demand season. We only can focus on the immediate term for now.” A converter from Fujian added, “Demand for our end product remain unchanged, hence we plan to continue source in small quantity. In addition, there are so much of uncertainties at the moment.”

Players reported seeing limited supply for LDPE film cargoes, which pushes prices up recently. Meanwhile, many buyers are reporting a possible delay of both PP and PE cargoes, mostly from Middle East, as a result of Hanjin Shipping financial turmoil. A trader informed, “We have 300 tons of Middle Eastern homo-PP cargoes, which was scheduled to arrived by 10 September. However, Shanghai and Xiamen ports authorities have rejected the entry of Hanjin ships. We have informed our customers, and at the moment, we only can wait.” Many have expressed otherwise opinions, seeing this as a factor that support firmer trend in the coming weeks due to these late shipment.

In Southeast Asia, market sentiment is rather calm toward the end of the week and very limited number of offers from international suppliers. Import homo-PP to the regional evidently moves up with offers below the $1000/ton mark vanished from the market. A major Saudi Arabia producer lifted homo-PP prices to Vietnam by $50-60/ton compared the last done-deal levels reported two weeks ago, yet, bump into stiff buyers resistance, which forces the maker to cut its hike target. Traders in the country informed that several deals for this material were reported at $1010/ton CIF Vietnam, LC AS term, some $30/ton below initial offers. A woven bags maker said, “We are negotiating for further discount to replenish 200 tons. Demand for our end product is regular at the moment. PP market seems firming up, hence we plan to purchase some cargoes within these few days.”

Demand in Indonesia is described as soft since most buyers remain cautious, sourcing hand to mouth basis claiming slow end product demand. A trader in the country said, “Purchasing behaviour has changed and we are quite surprised with such slow buying activities despite most international offers have firmed up. Our customers complained about slower than expected end product demand, and this condition might prolong throughout September.”

Regional and international PE suppliers have mostly concluded their September businesses at the level that comparatively lower than last month. Sellers are generally feeling disappointed with the state of demand for HDPE film though the traditional peak season is around the corner. An international trader informed, “We have sold out September cargoes by now as we have a small allocation this month. Upstream costs are firm yet our customers are very reluctant to keep stocks. We hope the festive season would boost buying interest in the coming week.”

The bankruptcy of Hanjin Shipping Co. has rocked the market on the last trading day of August as not only Chinese players reported delay in shipment due to this issue, but also players in Vietnam and Malaysia. A Malaysian buyer informed, “We have 100 tons of Middle Eastern PE cargoes just shipped out two days ago using Hanjin. We expect the cargoes to be delayed, and there is little we could do at the moment. We still have some cargoes on hand and might source some nearby cargoes to meet our immediate need if it becomes necessary. Demand for our end product is stable.”

In the Plant Status news, market sources reported Shell Singapore is operating their naphtha cracker at about 75% capacity after encountered some issues at one of the furnaces. Meanwhile, other cracker in Singapore - The Petrochemical Corporation of Singapore (PCS) is also planning a week-long shutdown starting 3 Sept. South Korea’s LG Chem unexpectedly shutdown its Yeosu cracker on Wednesday due to some minor technical issues, the plant might remain offline for 2-3 days.

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