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In China, futures prices reverted the falling trend recorded in the past five sessions to close higher today. January delivery contract added CNY168/ton ($24/ton) for PP and CNY130/ton ($19/ton) for LLDPE. Both contracts settled at CNY8515/ton ($1056/ton without VAT) and CNY9610/ton ($1190/ton without VAT) respectively.

Domestic spot prices however, continue to move lower, slashing CNY50-150/ton ($7-22/ton) for PP and LLDPE film. LDPE film witnessed large drop of CNY150-200/ton ($22-29/ton) while HDPE offers remained unchanged. Firmer futures and upstream costs have encouraged better trading activities today, sources said. “Even after adjustment, producer’s price lists are still higher than distribution market. The thing is, our customers have come back to replenish material as they are running low on inventories, but remain sourcing on need basis,” a trader in Guangdong commented.

While buyers continue to hope for addition reduction in the near term, no large-scale price cut is expected given the lack of sales pressure at suppliers’ side. “At the current prices, most converters are still facing tough time to balance high raw material costs and slow end product business. We think further discount is necessary to attract more buyers to make fresh purchases.”

In the import market, the overall price range for homo-PP from dutiable origins has gone down $10-20/ton from last week with Indian cargoes emerged at $1010/ton CFR China, LC 30 days term. A buyer purchased few hundred tons said, “It is a surprise to the market that this cargo is well below Middle Eastern offers. We think weak demand in local India after the demonetization encourages the maker to speed up sales in export market before the year end closing.”

Indian PE producers are also very active in China market today, inviting buyers to place buy idea and bid on their available HDPE and LLDPE film cargoes. A trader in Xiamen offered Indian HDPE injection at $1080/ton CFR China, LC 90 days term said, “We are open to negotiation. Our customers are considering the shipping time as this cargos is for January loading.”

In Southeast Asia, market movement is not synchronised on the first trading day of the week as several producers announced December delivery shipment with hike while others are reducing. Buyers therefore, loosing confident in the near to medium term outlook and expectation for downward price adjustment just got stronger, especially for PP.

In Vietnam, major Middle Eastern producer keeps homo-PP prices at stable to $5/ton lower compared to last week, standing at $1030-1035/ton CIF Vietnam, LC AS term. Respond from local traders is very disappointed. A distributor said, “Many are placing bid at $1000-1010/ton pointing to plunging propylene cost. We are unable to meet such low prices at the moment.” Most local traders are not interest to make fresh replenishment amid bloated supply in domestic ground. “We have more cargoes arriving in December and we will not commit to fresh buy for the remaining of the year,” a trader said. This has aroused concern of a possible tightening domestic supply in January due to lack of cargoes arrival that time; unless traders hold back current material.

Meanwhile, effort to increase homo-PP prices in Indonesia appears to yield fruitless result as persistent sluggish demand condition overshadowed other aspect of the market. Both Thailand and Malaysian suppliers implemented $20-40/ton on homo-PP cargoes to Indonesia today. In contrast, Philippines’s homo-PP see additional discount to conclude at $1110-1130/ton CIF Indonesia, LC AS term, down from $1180/ton reported two weeks ago. A market source commented, “It is meaningless to increase price since there is no demand. We rollover domestic offers and yet see very limited interest from spot market with buyers constantly complaining about weak end product business.”

This situation, in addition to plunging propylene costs and depreciation of currencies within Southeast Asia region, have sketched a possible downward scenario for regional PP market, players said.

Similar trend is observed in the PE market today and buyers are caught with great confusion and caution. Major Saudi Arabia producer lifted December PE prices to Vietnam by $10/ton for LLDPE film and $20/ton for HDPE film and a buyer said, “Given mediocre demand and falling ethylene costs, we do not see any strong support for a price hike at the moment. For this, we think the producer might need to commit to larger discounts in order to conclude deals. Especially at the current exchange rate.”

It is also interesting that more PE cargoes from USA and India cargoes are showing up in Asia and couple of international traders are talking about bringing cargoes from these origins more often to the region in the coming months.