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In China, futures market is mixed with September delivery contract for PP edged CNY59/ton ($9/ton) lower while LLDPE contract gained CNY80/ton ($12/ton) from the previous session. Both contracts closed at CNY7903/ton ($995/ton without VAT) and CNY9220/ton ($1161/ton without VAT) respectively.

Domestic spot market sees little movement and traders started offering CNY50-100/ton ($7-14/ton) discount on both PP and PE cargoes. Converters in the BOPP sectors are entering the traditional slow season, from which it is less likely that buying interest would surge in the near term. “We only hope that futures market would remain firm and open the arbitrage opportunity window. This plays an important role in stimulating demand in the spot ground during June,” a trader commented.

In the import ground, the PE market is under pressure from the amble availability of Iranian cargoes. Traders selling these cargoes decided to offer another $20-30/ton discount on both HDPE and LLDPE film cargoes to the country from last week in an effort to deplete inventories. Several deals for these cargoes are reported at $970/ton for LLDPE film, CFR China TT 30:70 term; though many are raising expectation that prices might inch lower in the near term. There are market talks that Iranian PE cargoes are piling up at China main ports at the moment with total quantity is about 30% higher than same period last year. “Due to the payment issues, the cargoes off-take rate is rather slow in China despite competitive prices. We expect suppliers to divert some quantity to nearby Southeast Asian market in the coming days,” a market source added.

Import offers for homo-PP to China is rather limited and a Saudi Arabia producer is still keeping prices at $1020/ton CFR China, LC 60 days term. Overseas suppliers are not showing interest in offering PP to China in recent month, yet there is no panic buying observed in the market thanks to comfortable domestic supply.  

In Southeast Asia, trading activities are rather limited toward the end of the week. Though buyers are actively asking for offers today, most international suppliers reported to have concluded very few deals. An Indian producer agreed to only $5/ton discount on their homo-PP cargoes to Vietnam, at $1060/ton CIF Vietnam, LC AS term, however, many local traders are not showing great interest. A buyer said, “Import homo-PP market is firming up on tight availability and strong upstream costs; however, the risk is very high. We have temporary suspended our purchasing activities to monitor market development.”

A major Saudi Arabia producer also lifted homo-PP prices to Vietnam to $1070/ton CIF, LC AS term. Instead of giving large discount like in previous month, the producer only offer $10/ton discount this time to close deals at $1060/ton with the same term, which indicated $20/ton hike from the last conclusion. Similarly, traders are rather reluctant though the available quantity is really limited. A market source commented, “Not only in Vietnam, but import homo-PP offers across Asia are firming up. We are just concern over the sustainability of the trend since demand in China does not seem to pick up. In addition, there are also several other bearish factors including the Ramadan season and the summer holidays in the USA, which might encourage suppliers to direct more cargoes to Asia. We prefer to take cautious stance.”

The regional PE market is not very positive and buyers are holding very low confident level about the near term market outlook. One of the factors contributed to such condition is that sellers are racing to attract sales by reducing offers. In fact, today a major Thailand producer is collecting bid for HDPE film at $1110/ton CIF Vietnam, LC AS term. A buyer commented, “Though it is still subjected to confirmation, such activity is stirring market concern up. If the producer decided to sell a large volume at this price level, other cargoes might face real pressure.”

The situation is not very satisfactory in local Malaysia either despite the large price cut introduced by domestic producer in the previous session. Buyers here are very reluctant in making replenishment claiming slow end product demand.