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In China, futures market softens slightly despite positive trade data released by the government. September delivery contract for PP inched CNY36/ton ($5/ton) lower from last Friday to reach CNY7570/ton ($938/ton without VAT). LLDPE contract loss CNY30/ton ($4/ton) to close at CNY8735/ton ($1082/ton without VAT).

Domestic spot market sees very limited movement as buyers are mostly monitoring further development before taking action. It is reported that total PP and PE inventories at domestic major producers’ warehouses are still hovering above the 920,000 tons, which is above the average levels. This explains to the fact that local producers are offering various discount schemes depending on purchased quantity with aim to speed up sales process.

A producer source commented, “Inventories pressure persist until now. Many local converters are suffering from weak end product business and strict environmental inspection, leading to slower than expected demand for both PP and PE. We are not very confident about the near term market outlook.”

In the import market, offers for homo-PP below the $1000/ton threshold are still widely available, putting tremendous pressure on cargoes at the upper end of the overall price range. Traders, who were keeping Saudi’s homo-PP prices in the range $1050-1080/ton CFR China in the previous week, have now stepped back on the offers, due to stiff buyer resistance. “We are not seeing many import shipment arrival in recent weeks, yet competitive local materials are diminishing the need to purchase import cargoes. ChinaPlas is around the corner and might weaken demand further,” a trader offered Middle Eastern homo-PP yarn at $1010-1030/ton FCA China said.   

In Southeast Asia, there is no drastic movement on the first trading day of the week while most suppliers are maintaining offers on the stable to softer note compare to last week. Regional buyers are on the other hand, holding pretty tight on the wait and see stance after the energy complex plunged to multi-months low levels.

Regular Chinese homo-PP cargoes are concluded at $1050/ton CIF Vietnam, LC AS term with form E, players said, “However, we only made a small purchases as market seems bearish in the coming weeks. We plan to focus more on depleting on hand cargoes since domestic ground also started showing weaknesses.”

In fact, local PP and PE market in Vietnam softened slightly from last week as sentiment is affected by falling import offers. A traders reportedly cut offers by VND200,000/ton ($9/ton) said, “Buyers are not showing as strong interest this week, partially due to sufficient replenishment and also hoping to see lower prices in the near term. We are not keeping high inventories, hence not facing strong sales pressure.” Meanwhile, many converters are complaining about mediocre demand condition for end product business, in which few wish to keep high inventories.

A major local producer in Indonesia has also implemented further price reduction on both PP and PE cargoes on the back of limited buying interest. Players here reported a delay of import Vietnamese homo-PP cargoes, which cause a delivery disruption within local ground for this grade, “Other than that, we are still having comfortable stock. We think Vietnamese suppliers are more interested in selling in domestic Vietnam market since prices are more attractive than exporting to Indonesia at the moment,” a trader said.

In the PE market, most deals for May shipment have been closed from which there are very few new offers observed today. “We placed bids for Kuwait HDPE film at $1120/ton CIF Vietnam term, however the supplier refused to accept. We might continue wait and see since market outlook isn’t so bright,” a Vietnamese buyer said.

Strong ethylene costs have not provided sufficient support to the downstream markets over the past month and PE continues to be transacted below ethylene CFR Northeast Asia term. Ethylene therefore might find its fast way to move south, industry expert said. Another regional buyer added, “Our Saudi supplier is willing to sell LLDPE film at $1170/ton CIF Vietnam, a $20/ton drop from our last purchase, yet we decided not to take position. It is just too risky, especially when demand in China remains sluggish.”