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In China, futures prices on Dalian Commodity Exchange continue to post slight reduction as contract 1609 for PP edged down CNY17/ton ($3/ton) while LLDPE futures decreased CNY50/ton ($8/ton) from previous trading session. Both contract settled at CNY6648/ton ($862/ton without VAT) and CNY8035/ton ($1042/ton without VAT) respectively.

Domestic offer for spot PP continue to increase CNY50/ton ($8/ton) compared to yesterday as tight local supply for raffia grade hold prices from following the futures trade. PE cargoes meanwhile remain largely stable, however buyers are placing bid at well below the initial offer level.

A converter in Fujian received offers for domestic homo-PP raffia at CNY6900/ton ($896/t excluding VAT) said, “Prices has been suspended from the weakening trend with the support from limited availability, however, we believed this is very temporary. We are expecting discount to emerge after the holidays next week since several plants come back online would ease the supply tightness. For that, we plan preserve the wait and see stance in the coming days.”

In the import market, most deals on PE cargoes are reported with discounts though purchased quantity is smaller than usual. Indeed, a trader procured Taiwanese HDPE film at $1100/ton CFR China, LC AS term, some $20/ton lower than initial offer said, “We see most buyers are withdrawing from market as the Dragon Boat Festival approach. This might cause even more limited trading activities in the coming week, therefore we remain conservative in making large purchase.”

After the fresh round of price reduction in import homo-PP prices yesterday, several deals were observed. Meanwhile, local producers are not showing interest in exporting cargoes to the near by Southeast Asia market given higher prices in local ground. A coal-based PP producer offers their cargoes at $960/ton FOB China, LC AS term said, “Increased local prices cause our export cargoes become less competitive. We are monitoring the market movement before making further decision, however, we are not felling optimistic about the near term prospect.”

In Southeast Asia, market sentiment is quiet with limited number of new offers observed as most sellers claimed to have sold out available allocation for this week. There is a slight signal that import homo-PP to the region might be heading for stabilization with a number of buyers expressed their intention to replenish cargoes in the near term. A Vietnamese buyer reported, “We have been checking with our suppliers about cargoes availability, however, they might only announce offers again by mid of the month. We plan to make replenishment within these two weeks, as we believed that market has very little room to go down further. Our concern is that would local prices follow the stabilizing trend in the import market?”

Meanwhile, players in Indonesia are speculating a possible rebound after Ramadan celebration in early July with a trader said, “Buyers are normally not keeping high inventories before the long holidays, however, they should return to make replenishment by the second half of July. We hope this together with the shutdown at couple of major regional plants during the period could support a rebound. At the moment, buyers still remain cautious to monitor further movement in the energy market after the OPEC meeting before taking position.”

The PE market witness additional downward pressure from weakening demand as packaging sector enters the slow season. Food packaging converters in Malaysia are rushing last orders before the Ramadan arrive while planning to cut operation rate toward the end of the month, which discourages large buy at the moment. At the meantime, a major Thailand producer implemented another $15/ton reduction on their HDPE cargoes to Vietnam today compared to the beginning of the week to reach $1120/ton, CIF, LC AS term for HDPE film. Source from the producer inform, “Most of our customers are placing bid for $40/ton lower, yet we are not in the position to lower offer too aggressively now. Demand is slow and the outlook remain bearish.”

Import Iranian LLDPE film to Vietnam has breached below $1100/ton threshold to reach $1080/ton CIF, LC AS term. In spite of the unpopularity of the cargoes, many expected this new low to add more reluctance to buyer’s purchasing decision process, even knowing the limited supply condition for LLDPE film cargoes.

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