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In China, futures market slipped on the first trading day of the week with contract number 1709 for PP closed at CNY102/ton ($15/ton) lower, reaching CNY8302/ton ($1056/ton without VAT). LLDPE contract down CNY20/ton ($12/ton) from last Friday, reaching CNY9425/ton ($1199/ton without VAT).

Sentiment in domestic spot market is rather steady as weaker futures trading narrow down the arbitrage gap. Meanwhile, demand from the agricultural sector continue to improve, yet at very slow pace with a trader said, “Due to the strict environmental inspection, we do not expect demand to come back strong this year. Many of our customers are taking near-prime or off-grade cargoes as prices are more competitive.”

At the meantime, players remain optimistic about the near term outlook, pointing to a possibility that end product businesses would be better for the remaining manufacturers after a number of unqualified plants were forced to shutdown during environmental inspection.

There are very limited transactions observed in the import market, as most overseas suppliers have not announced new offers, seeing upstream cost surging to multi months high. Traders are maintaining offers for import homo-PP at $1030/ton for Indian origin and at $1060-1070/ton for Saudi Arabia origin, all based on CFR China, LC 0-90 days term. “Converters, especially in the BOPP sector are still facing traditional off-peak season, hence acceptability is still low. We hope to see better buying interest in the near term.”

In Southeast Asia, import offers for both PP and PE continue to climb with additional support from surging upstream costs, especially ethylene. In fact, ethylene based on CFR Southeast Asia rapidly escalated $115/ton in just over a week with very limited spot cargoes available, industry sources said. This firming trend is expected to persist in the coming days though supply might loosen gradually as Malaysia’s Lotte Chemical Titan, Japan’s Mitsui Chemical and India’s Indian Oil Corp restart crackers.

On the other hand, downstream PE market is not firming up in the same pace and suppliers are complaining about difficulties they faced in concluding deals at higher price levels. An international trader lifted offers for Kuwait HDPE and LLDPE film by $30/ton week on week, reaching $1150/ton CIF Vietnam, LC AS term. The source said, “Our customers are not responding to the latest offers claiming weak local market. Our principal supplier is not willing to negotiate any further and buyers are not interested too.”

Similar condition is observed in local Indonesia, where both domestic producers announced new offers with increases week on week. A buyer received HDPE film prices at IDR300,000/ton ($23/ton) to reach IDR16,000,000/ton ($1201/ton) without VAT, cash term said, “Market is slowing down and it appears that any further increment will be resisted. Downstream demand is still weak. The support is not strong enough for additional hike.”

The regional PP market is also stabilizing with offers at the upper end of the overall price range are not attracting sufficient buying interest. Middle Eastern homo-PP offered to Indonesia, again concluded at below the $1100/ton mark today, at $1080/ton CIF, LC AS term. A player said, “Market is stabilizing and import homo-PP from dutiable origin might not be able to close deals at above the $1100/ton threshold. Some Southeast Asian cargoes are offered at $1170/ton CIF Indonesia, but deals are at $30/ton discounts.”

Overseas suppliers are leveraging the absence of Chinese materials and the delay of cargoes sold by Noble Group to keep prices firm. It is the tug of war between limited availability and highly resisted buying attitude. Players are expecting prices to stabilize throughout August.