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In China, futures market fell for the first time after nearly a week of continuous firming up. PP contract for January delivery shredded CNY270/ton ($41/ton) to CNY8854/ton ($1141/ton without VAT). LLDPE contract dropped CNY165/ton ($25/ton) to CNY9690/ton ($1249/ton without VAT).

Domestic market reacted almost immediately to the changes in futures trading. Spot offers for PP and LLDPE film decreased up to CNY200/ton ($30/ton) compared to the previous trading day, except for HDPE film, continue to journey north, adding CNY200/ton ($30/ton) due to limited supply. “With the reduction, we are positive that converters would come back to make fresh buy. The peak preparation for the year-end festive season is still in place,” a trader commented. The source added that sales for LDPE film and heavy-duty grades are improving, in line with the start of the mulch films season.

Supply for HDPE film is so tight, it pushes prices to multi year high levels. Locally held Saudi Arabia HDPE film reaches CNY11250-11500/ton ($1450-1483/ton without VAT) EXW China, cash term. At the meantime, re-export cargoes from Vietnam remain firm at $1270/ton CFR China for various origins. A buyer reported, “We placed bids at $20/ton lower and received rejection. Vietnamese sellers are not agreeing to anything below the offered level at the moment.” Several deals for Saudi Arabia HDPE film are reported at $1250/ton CFR China, LC AS term.

Apparently, the number of deals for import homo-PP has also improved. Dutiable cargoes are transacted in the range $1130-1135/ton CFR China, LC 90 days term basis. “Buyers accepted the cargoes due to limited import offers from overseas sellers. At the meantime, we are unable to conclude any deals for Saudi cargoes as we were firm at $1140/ton CFR term. If domestic market cotinue to fall, we think the whole import ground just hinge on the supply tightness,” an international trader informed.   

In Southeast Asia, offers for HDPE film in the region remains relatively firm with healthy buying sentiment in the nearby China market; however, other grades have shown signs of softening.

A Saudi Arabia producer collected bids for LLDPE film in the previous session at $1170-1180/ton CIF Vietnam, LC AS term, has agreed to deals at the upper end of the bid range. “We decided to make some purchases due to running low on inventories. With the shutdown at PetroRabigh plant, supply for LLDPE film might be tight in November. At the meantime, the supplier refused any discount on HDPE film cargoes, insisting on the $1240/ton CIF Vietnam level,” A Vietnamese trader reported.

A major Thailand producer also reported to have limited export availability for HDPE film at the moment due to healthy demand in local market, “And therefore, we have suspended all offering for HDPE film to regional buyers this week in order to clear backlogs. We might re-open offers for December shipment in the coming week.”

It is reported that ethylene supply within Asia is improving with the influx of deep-seas cargoes from Middle East. Ethylene costs might not fall immediately, industry experts said, especially with the recent firming trend in downstream PE market.

The regional PP market remains on the stable to softer track and suppliers are gradually reducing prices to close deals. In fact, Saudi Arabia homo-PP injection concluded at $1150/ton to Vietnam today, which is $20/ton below initial price list. “And therefore, we believed that prices might breach below the $1150/ton mark soon. We plan to make some replenishment by end of the month if our suppliers agree to additional discount,” a Vietnamese buyer commented.

Even import PP block copolymer to the region appears to be softer from the past week. Major Singaporean producer is collecting bids for PP block cargoes at $1270/ton CIF Indonesia, LC AS term. If deals were to be materialized, this would indicate $60-80/ton drop month on month.