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In China, futures prices regain some strength on the first trading day of the week as contract 1705 for both PP and LLDPE settled higher. PP futures gain CNY81/ton ($12/ton) from last week to reach CNY9349/ton ($1163/ton without VAT) while LLDPE futures leaped CNY110/ton ($16/ton) to reach CNY10390/ton ($1293/ton without VAT).

In domestic spot market, most of PP and PE offers firmed up CNY50-100/ton ($8-15/ton) with the support from the positive futures trading, except LDPE film prices loss CNY100/ton ($15/ton). A majority of trader have returned to the market though trading activities remain limited since buyers might only come back after the Chap Goh Mei celebration.

At the moment, PP and LLDPE futures is about CNY200-300/t ($29-44/t) higher than spot market prices, which encourages traders to leverage the arbitrage opportunity. A trader commented, “Only couple of our manufacturing customers have returned to make replenishment though prices at the upper end of the range continue to face resistance. However, we do expect better demand condition in the coming week, considering the current market situation in near by Southeast Asia region.”

Another trader offers USA’s HDPE blow molding at $1200/ton CFR China, LC 90 days term with the main aim to test market respond, said, “There are no buyers for this parcel at the moment. Yet, we think market is set to firm up since demand in Western market is healthy and shipping costs have surged considerably.”   

In Southeast Asia, the firming trend remains in place with most new offers emerged at higher levels compared to last week. Suppliers claimed to have limited supply and the strong upstream costs are providing additional support for prices to gallop higher.

An international trader lifted PP and PE offers to Indonesia compared to last week in the range of $10-30/ton to reach $1100/ton for homo-PP, $1230/ton for LLDPE film and $1210/ton for HDPE film, CIF Indonesia, LC AS term. The source added, “We have very limited allocation as our principal supplier has yet to resolve the stubborn technical issues at the plant, and the restart date has been delayed from mid February to 25 February.” Another distributor based in Vietnam for the same material confirmed this issues saying, “Some of our LLDPE film cargoes has delayed up to one month due to the plant issue. We think allocation for this month will be very limited.”

In another news, Qatar’s Qapco might postpone the maintenance shutdown at their PE line to April from initial plan in March due to lack of stock on hand. A source close to the company said, “We have not been able to stock up sufficient quantity due to some technical glitches in the previous month. At the moment, we have some HDPE film cargoes, yet LLDPE film and LDPE are very tight. We might not be able to adjourn the maintenance too far, therefore we are still considering the schedule.”

Looking at the PP market, import homo-PP from dutiable origins are mostly touching the $1100/ton threshold and above and negotiations for deals below this mark are mostly rejected. An Indonesian buyer purchased Saudi’s homo-PP yarn at $1100/ton CIF, LC AS term informed, “We placed bid for $10/ton discount earlier yet the supplier refused any reduction due to limited availability. Therefore, we decided to take up some quantity and would withdraw to the sideline, monitoring further development.”

In the regional local market, Vietnamese traders reported better demand condition, which drive domestic prices higher from last week. A woven bag manufacturer received locally held Saudi’s homo-PP yarn at VND29,300,000/ton ($1180/ton without VAT), FD Vietnam, cash term said, “Prices surged too quickly and at the moment we are waiting for more offers from overseas suppliers before placing new orders.” Meanwhile, there are couple of deals in local market reported at VND28,800,000-29,000,000/ton ($1160-1165/ton without VAT), FD Vietnam, cash term.