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In China, futures market makes a dramatic dive today. January delivery contract for PP plunged CNY226/ton ($35/ton) to close at CNY9081/ton ($1189/ton without VAT) while LLDPE contract settled at CNY205/ton ($31/ton) lower, reaching CNY9935/ton ($1300/ton without VAT).

Trading activities in domestic spot market slow down slightly as players temporary pause purchases to evaluate the near term market outlook considering the recent weakness in futures trading. However, with no sales pressure, traders only offer a small discount of CNY50/ton ($7/ton) on both PP and PE cargoes.

It is reported that total PP and PE inventories at domestic major producers’ warehouses rose 15,000 tons from the previous day, reaching approximate 730,000 tons as of today. In spite of higher inventories levels, players are not showing much concern, citing that this level is still well below the psychological threshold and there is a bottleneck for further accumulation.

The import market is mixed. Thailand PE suppliers – whose cargoes were standing at the upper end of the overall price range, faced stiff resistance from buyers, which forced the maker to step back on LLDPE film offers by $30/ton from last week. A trader said, “It also showed that market has reached the peak, in which HDPE and LLDPE film cargoes priced above the $1300/ton threshold are out of acceptance range at the moment. Our regular buyers are placing lower bids to conclude deals and we might monitor a little longer before making decision.”

Iranian LDPE film witnesses similar situation, dropping $40/ton to reach $1280/ton CFR China, TT in advance term. Other Middle Eastern suppliers in contrast, continue to up-adjust both PP and PE offers to China, however very limited deals are reported at the latest price levels.

In Southeast Asia, most suppliers are holding prices steady from the previous trading day though buyers are mostly adopting cautious stance with very few deals reported. Buyers, especially local traders, are very reluctant to make fresh replenishment at the current market levels and show strong tendency to hold back the previous cargoes and release to the market gradually.

A Vietnamese trader commented, “Import homo-PP has been steadily firming up since June, and if we were to accept the current prices at $1180-1200/ton CIF Vietnam, LC AS term for dutiable origin, market must continue to firm up in the next two months in order to make profit. We are not very confident about the outlook toward the end of the year, hence we prefer to stay on the side-line.”

Meanwhile, a Thailand producer announced homo-PP offers to Vietnam at $1230/ton CIF, LC AS term and managed to conclude deals at only $5/ton discount. A converter purchased the cargoes informed, “We are running low on inventory while market might continue to firm up in the near term. Very few suppliers have large quantity to offers, hence we decided to make a purchase of 400 tons this time.” Couple of deals for Indian homo-PP also reported at $1180/ton to Vietnamese converters today.

It is interesting that the number of PP block copolymer offers to Southeast Asia is very limited this week, while a South Korean producer decided to withdraw their offers to Indonesia at $1260/ton CIF, LC AS term without clearly stated reasons. There are market talks that South Korean producers are offering homo-PP cargoes to USA at $1250/ton FOB Korea term, however, CommoPlast is unable to confirm the news at the time this report is published.

In the PE market, regional producers continue to lift metallocene PE prices with Thailand cargoes offered to Indonesia at $1450/ton CIF, LC AS term, up $40/ton week on week, due to surging upstream costs. “Our suppliers might implement further hike in the coming week and we are seriously considering whether to make the purchases,” a converter commented.

It becomes clearer that import HDPE and LLDPE film from Saudi Arabia to Vietnam below the $1200/ton threshold is disappearing this week and only Indian and Iranian cargoes are at below this mark. However, Vietnamese buyers are not showing great acceptance towards the prices. A Saudi Arabia maker offered LLDPE film to Vietnam at $1230/ton in the previous trading day and bump into the expected market resistance, from which the cargoes were directed to the nearby China market.