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In China, the firming trend in futures trading observed in the past two sessions appears to be short live as January delivery contract fall again today. PP future slumped CNY182/ton ($126/ton) and LL reduced CNY245/ton ($36/ton). Both contract settled at CNY8514/ton ($1055/ton without VAT) and CNY9525/ton ($1180/ton without VAT) respectively.

Domestic spot market has not responded strongly to the recent development in the futures trading, and remain calmly on the stable to softer track. PP offers from major local makers drop another CNY50/ton ($8/ton) from yesterday while all PE grades are down by CNY50-100/ton ($8-15/ton). There are very limited trading activities in local ground as players are paying more attention to the import market, where low cost cargoes from India and USA are attracting great buying interest. This demonstrates the fact that demand still exists, and when prices are met, buyers are showing no hesitation in taking larger quantity.

A trader purchased USA material at $980/ton for homo-PP and $1020/ton for PP block copolymer, all based on CFR China, LC 90 days term said, “These cargoes might not be available for long, hence we think this is a good opportunity for us to make replenishment.” Whether these low cost material would remain in the market in the near term or not, it is definitely putting higher priced cargoes in the shadow. Couple of international traders are offering additional discounts on Middle Eastern homo-PP; however, market is muted. There is a growing expectation among buyers to achieve deals for homo-PP at three-digits prices.

Import PE to the country is no less exciting and more Indian cargoes are now available in the choice of buyers. While offers for this origin remain below the $1100/ton threshold, the HDPE blow molding and injection have reached $1040/ton CFR China, LC 90 days term. It is interesting that Iranian LDPE film are being re-exported from Russia to China at $1330/ton (for December shipment), which is about $90-100/ton lower than official price list given during late October. 

In Southeast Asia, players are bemused with the speed of change in the near-by China market, most referring to the low price PE cargoes from USA and Indian suppliers. Some of these parcels have made its way to Southeast Asia, threatening the current supply and demand dynamic in the region. A Vietnamese buyer received USA LLDPE film at $1080/ton CIF, LC AS term said, “We were also offered Middle Eastern LLDPE film at $1150/ton and this could just be the beginning of the downtrend, therefore, we decided to wait.”

A Malaysian converter reported to have received re-exported Indian LLDPE film offers from China at $1090/ton CIF, LC AS term. The source said, “We did not expect such prices and not only that, our supplier is inviting us to bid. Market is deteriorating too rapidly, and we prefer to stay conservative.”

This appears to be an actually issue for other international producers, who have already announced December delivery prices as buyers are very reluctant to enter any negotiation. A regional buyer, who has placed bid for Saudi’s LLDPE film at $1160/ton since the previous trading session said, “Our supplier ring up to check our allocation need, but we might drop this cargo for now. Market does look like heading for a correction.”

Fear about a possible steep price reduction started to form in the even peer producers from Middle East and Southeast Asia decided to match the effort to defend market share. This is especially when several international traders have wowed to bring Indian and USA’s PE cargoes to the region more often in the coming year.

The PP market is somehow very much stable, the question players are asking is how sustainable is this trend, pointing to the recent weak buying interest. Some discounts have emerged on both Middle East and Asian cargoes, however market is not moving synchronously. A trader said, “We really lack of fundamental support in India and Southeast Asia, and with China is showing diminished interest for high priced cargoes; near term outlook does not seems so promising.”