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In China, futures market opens the first trading session on firm notes. September delivery contract for PP increased CNY43/ton ($6/ton) from last Friday to close at CNY8469/ton ($1071/ton without VAT). LLDPE contract on the other hand gained CNY85/ton ($13/ton) to reach CNY9640/ton ($1219/ton without VAT).

Trading activities in local market are calmer as traders have obtained most of the needed quantity in the previous week. Yet, players show no expectation for any downward movement pointing to the fact that local producers are not facing sales pressure. Spot PP and PE inched CNY50-100/ton ($7-14/ton) higher than the previous session.

In the import ground, international traders continue to drive the PE market higher, pushing import LLDPE film to above the $1100/ton threshold. A trader open new offer for Iranian LLDPE film at $1110/ton CFR China, TT in advance term, some $60/ton hike week on week said, “We are unable to conclude deal with such large increase and though market still has room to firm up further, we think the extent might be smaller.”

Chinese players started discussing about the impact of the unexpected upturn on the medium term market outlook, as actual demand from converter has not improved. Several sources blame the influx of hot money to be the main cause, which might lead to a possible correction, yet market remains positive in the near term.

There are very limited offers for import homo-PP and buyers have not raised acceptance levels higher than $1020/ton for dutiable origin. A trader offer Indian homo-PP at $1060/ton CFR China said, “We are open to negotiation and buyers are just not interested.”

In Southeast Asia, there are limited movement on the first trading day of the week as most international sellers have yet to open fresh offers. Couple of Middle Eastern suppliers decided to lift homo-PP offer by $10-20/ton though regional buyers remain irresponsive. A major Saudi Arabia maker implemented $20/ton hike on import homo-PP offers to Indonesia from last week, at $1090/ton CIF, LC AS term. An international trader offered on behalf of the producer informed, “We are having regular allocation this time though buyers might resist this level given competitive Southeast Asian origins and local cargoes. We are monitoring market respond before taking any decision.” Similar offer is observed in Vietnam.

Meanwhile, a Chinese coal based PP producer take a more aggressive stance, lifting export offers by $40/ton week on week, bringing latest prices to $1120/ton FOB China, LC AS term. Southeast Asian buyers portray strong reluctancy in accepting the cargoes given the presence of competitive cargoes in local ground. This is the third week in a row the producer up-adjust export offers, claiming healthy sales in local ground. A producer source said, “Sentiment in China improved significantly and likely to remain in this condition throughout this month. Southeast Asian buyers are not showing much interest in our cargoes, and we might focus more on local sales this time.”

In related productin news, PetroVietnam is set to restart its 150,000 tons/year PP unit on 25 July after completing 52 days maintenance work. The producer has resumed offering to Indonesia today at $1150/ton CIF, LC AS term for homo-PP cargoes.

Overseas PE sellers are monitoring further development without making much movement. However, looking at the current firming trend in nearby China market, it is clear that Southeast Asian region shall see spillover effect. A trader attempted to lift offers for Iranian LLDPE film by $50/ton from last week to Vietnam, reaching $1120/ton CIF, LC AS term said, “Customers have not placed any bids complaining that the new offer is above acceptance level. We plan to hold firm on the cargoes as we received good inquiries from Chinese buyers.”

Thanks to firmer import market, domestic suppliers in Indonesia gain more support in up-adjusting local PE prices. However, this has adversed effect on the number of deals. A HDPE bag manufacturer said, “Our supplier lifted HDPE film price twice since last Friday to IDR15,000,000/ton ($1126/ton without VAT), FD Indonesia, cash term. We have sufficient material till early September and we are in no rush to replenish now.”