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In China, futures prices continue to increase on the second trading day of the week, though the pace is slower. May delivery contract added CNY168/ton ($24/ton) to close at CNY8934/ton ($1110/ton without VAT) for PP. LLDPE futures gained CNY110/ton ($16/ton) to reach CNY9920/ton ($1232/ton without VAT).

Trading activities in local market is healthy. In fact, on Monday alone, domestic PP and PE inventories at major producer’s warehouses have dropped approximate 60,000 tons, private data showed. For this, players are becoming more confident in near term outlook pointing to the possibility that suppliers might hold firm stance on prices amid low inventories pressure. However, looking from another angle – most cargoes taker these two days are traders, who are leveraging the arbitrage opportunities between the futures and spot market. Buying interest among converters remains very calm. And this raises questions about the sustainability of the current trend.

In the import market, homo-PP from Middle East and India are mostly offered at the level $1020/ton CFR China, LC 0-90 days term with a trader informed, “However, our customers are placing bids at much lower levels. The weak Chinese Yuan has encouraged buyers to make purchases in local market if they cannot obtained lower prices from international suppliers. We think the momentum effect from energy market would keep sentiment strong in the coming days.”

Import PE to the country is mixed, especially on regular cargoes. Major Thailand maker down adjusted PE prices to the country in the range $35-60/ton compared to last week with LLDPE film and LDPE film reduced the most. At the meantime, Qatari’s LLDPE film inched $10/ton higher to reach $1130-1140/ton CFR China term on the support of sturdy crude oil prices. However, the present of USA cargoes still weight down on the overall market movement. A trader said, “Buyers are very actively requesting for USA material at $1070/ton for LLDPE film and $1200/ton for LDPE film and we are waiting for our principal supplier to allocate extra quantity.”     

In Southeast Asia, more international producers announced new offers to the region, yet buyers are less responsive claiming sufficient supply. Major Indian maker opens homo-PP prices at $1030/ton CIF Vietnam, LC AS term with a distributor commented, “Our customers are not very responsive after receiving the new prices. Some are informally talking about the $1000/ton buy idea; however, we think our principal suppliers might not accept this level anymore.”

A converter received the new prices informed, “We are fully covered till end of February, hence not having interest to make purchases at the moment. The PP market is full of uncertainties. We think market is returning to the tug of war between low availability from international market and unsupportive demand.”

Meanwhile in Indonesia, players reported that Vietnamese homo-PP at $1080/ton CIF term is no longer available as suppliers lifted offers by $30/ton today. A major Thailand maker reportedly rollover their PP prices at $1210/ton CIF Indonesia, which is considered as way above market acceptance levels. Buyers believed that in order to close deals, the supplier would have to offer larger than usual discount. An Indonesian buyer informed, “Local producer has cut homo-PP prices by $20/ton, yet we are able to obtain more competitive offers in the distribution market. Still, the lower end prices have disappeared from the market, thank to the energy values. We think market would remain on the stable to firm track in the near term, until the current trend in China is proved to be sustainable.”

The regional PE market is a little slack though suppliers are attempting to hold firm on their prices. To attract buying interest, most sellers only offer small discount, not willing to commit large price cut. A Thailand producer is planning to open new HDPE film offer for early February delivery to Vietnam and currently surveying the market acceptance. A source close to the producer said, “We are planning for rollover prices at $1120/ton; however, no official offer at the moment. It appears that the general supply is comfortable, hence buyers are actively comparing prices.”