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In China, futures market continues to move lower on the final trading day of the week with both major contract for PP and PE fell three digits in value. September delivery futures for PP settled at CNY184/ton ($27/ton) lower at CNY8178/ton ($1034/ton without VAT). LLDPE contract slipped CNY115/ton ($17/ton) to reach CNY9400/ton ($1188/ton without VAT).

Despite the positive sentiment observed in recent days, a worrisome sign is that the number of PP contract for September delivery remains high at the time that most papers should have been gradually transferred to the next contract (1801). Spot prices for both PP and PE prices therefore dropped CNY100-150/ton ($14-22/ton) day on day. A converter in the packaging sector said, “Our end product demand would normally pick up by second half of September and therefore, we would only place more orders in August if suppliers become more willing to give further discount.”

Import PE market is loosing ground too with Iranian sellers stepped back on LLDPE film offers by $40/ton to $1070/ton and $20/ton on LDPE film to $1150/ton CFR China, TT in advance term. A trader informed, “Buyers are resisting higher prices and we think market heat up too quickly in recent day even without concrete support from converters. We only managed to conclude few deals at the adjusted prices.” Other Middle Eastern suppliers have yet to take any action.       

In Southeast Asia, several international suppliers implemented hike on import homo-PP to Vietnam, driving most offers to above the $1100/ton threshold. This trend is expected to persist in the near term on the back of lacking sales pressure and satisfactory margins achieved in the nearby China market. Buyers on the other hand, become increasingly resisted to the hike, from which a good number claimed to have suspended purchases. An international trader opened offers for Saudi homo-PP at $1110/ton CIF Vietnam said, “We only have 200 tons allocation for this week and our customers are asking for $30/ton discount to buy all the quantity available. However, we insist on the level of $1100/ton since we have sold a good quantity to China at relatively high prices.”

Another buyer received Indian homo-PP at $1100/ton CIF Vietnam informed that the supplier is not willing to enter negotiation, adding, “We have comfortable inventories on hand and at the current prices, it is not attractive enough to stock up extra quantity.” Locally held homo-PP offers rose modestly to about VND28,800,000/ton ($1152/ton without VAT), FD Vietnam, cash term, yet most deals are at VND300,000-500,000/ton ($13-22/ton) discount, depicting the sluggish demand condition.

Meanwhile, domestic traders in Indonesia withdraw offers on the final trading day of the week though one of the major domestic producers lifted homo-PP prices by additional $10/ton on constant improving demand condition. “It is certain that more hike would emerge in the coming week and we are hoping that demand would catch up,” a market source said. Overseas sellers also reported to have achieved import sales to Indonesia at higher price levels.

The regional PE market does not seem to be as firm as PP and the price gap between the two grades is now very narrow. Buying interest is falling as suppliers refused any price negotiation. A major Saudi Arabia producer lifted LLDPE film price by $60/ton earlier this week to Vietnam, reaching $1140/ton CIF, LC AS term and a distributor said, “Our principal supplier has rejected all lower bids and we might have to wait until next week before the final decision.”

Domestic PE offers in local Malaysia also increase MYR120/ton ($28/ton) for HDPE, MYR50/ton ($12) for LDPE and MYR100/ton ($23/ton) for LLDPE film from last month. A converter informed, “Demand for our end product is not picking up and we do not expect the firming trend to sustain in the medium term. As a result, we continue to source material hand to mouth basis.”