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In China, futures prices extended the weakening trend with May delivery contract fell five out of the past seven sessions, accumulating a total drop of CNY1121/ton ($164/ton) on PP contract and CNY1305/ton ($194/ton) on LLDPE. Both contracts settled at CNY8778/ton ($1089/ton without VAT) and CNY9830/ton ($1219/ton without VAT) respectively.

Domestic spot market follows the futures trading very closely, with local offers for both PP and PE softened five consecutive days. However, the accumulated reduction range is much smaller of that on Dalian Commodity Exchange. It is reported that buying interest remains much of sluggish despite several measures taken by traders, which aims to stimulate trading activities. Converters are not showing any eager to make fresh replenishment as earlier expected, instead, holding wait and see stance on the side-line amid lack of end product orders.

In the import market, traders are attempting to increase their offers in line with the drastic movement in the upstream costs. In fact, ethylene based on CFR Northeast Asia term is now nearing the $1400/ton threshold, which is approximately $200/ton higher than the average import LLDPE and HDPE film to the country. This makes it uneconomical to produce PE and therefore, many producers decided to seek better margins in the upstream market instead of running PE at normal rate. A market source commented, “This is not very sustainable as PE remain the largest ethylene derivative and demand has been really sluggish over the past month. Inventories in China are pilling higher than usual. We prefer to take cautious stance in the coming weeks as it seems market might be nearing the peak.”  

There are several import homo-PP offers for USA origins at $1040-1050/ton CFR China, LC 90 days term. However, sellers still hold strong preference to re-export to Vietnam, where concluded prices for these cargoes are reported at $1130-1140/ton levels. Middle Eastern suppliers on the other hand, continue to push offers up to the range $1100-1120/ton CFR China for their cargoes, yet unable to attract buyers. A distributor said, “Local prices have been softening which makes import material become unattractive. We think import material could only achieve the hike target if domestic market firm up.”

In Southeast Asia, couple of international and regional producer has announced fresh offers for March delivery with substantial hike compared to last month for both PP and PE cargoes. However, initial respond from the market is rather lack of optimism.

A Saudi Arabia producer lifted HDPE film price to Vietnam by $100/ton month on month basis to reach $1250/ton CIF Vietnam, LC AS term while LLDPE film jumped $60-70/ton to reach $1260-1270/ton with the same term. The supplier claimed lack of availability due to low operating rate, and therefore might decline any lower bid. A trader placed bid for LLDPE film at $1220/ton said, “Local market slow down again though traders are attempting to push up prices, in line with the hike recorded in the import ground. We are not able to accept the new offers the moment and currently waiting for the supplier’s feedback.”

Meanwhile, a major Malaysian maker also opens fresh prices to regional market with $110/ton hike on HDPE and $50/ton increased on LDPE cargoes. Market sources reported receiving very limited quantity from the producer due to the recent plant shutdown. Latest offers stand at $1300/ton for HDPE film and $1430/ton for LDPE film, CIF Southeast Asia, LC AS term. An Indonesian buyer said, “These latest import offers are same levels as domestic price list. Therefore, it might be very difficult for buyers to accept.”

In the PP market, Saudi Arabia’s homo-PP offers to Vietnam has reached $1200/ton mark today. Buyers were informed about the lack of allocation, which supported such aggressive price decision from the maker. However, with the availability of the re-export cargoes from China, the PP bull might face hurdles in advancing any further, buyers said. This week, several deals for re-export material are concluded at softer levels compared to general market prices, prompting concern over the state of demand in China. A buyer commented, “Import homo-PP priced above the $1170/ton mark attract very limited buying attention, leave alone the $1200/ton level. Despite the irregularity origins of the re-export cargoes, prices are very competitive and we believed this would pressure other direct cargoes. PP market appears to be nearing the peak.”

In Indonesia, Polytama delayed the restart date at its 180,000 tons/year PP line by a week after 20 days maintenance shutdown. The company would only bring the unit on stream by 22 February 2017, sources said. A trader added, “Despite the production issue, we are not seeing any panic buying. Customers are really calm, monitoring the development in China. We fear that prices in Southeast Asia might face correction if buying interest in China remain weak in the coming weeks.”