Asia Daily PP and PE Overview 22 July 2016

In China, futures prices on Dalian Commodity Exchange sustained the firming trend on the last trading of the week with both contracts settled higher. September delivery PP contract gained CNY60/ton ($9/ton) to reach CNY8168/ton ($1047/ton without VAT) while LLDPE contract added CNY180/ton ($27/ton) from yesterday to close at CNY9020/ton ($1156/ton without VAT).

Domestic producers gain more confidence after two consecutive sessions of price increasing on Dalian Commodity Exchange. Fresh spot price lists for both PP and PE crested up CNY50-100/ton ($8-15/ton), reversed the weakening trend in place the last four trading days. Prices at the lower end of the overall price range appears to catch buyer’s attention with traders claimed achieving sales at these prices.

A trader concluded deals for local homo-PP cargoes at CNY8050/t including VAT ($1032/t excluding VAT), FD China, cash term said, “We lifted our offers by CNY50/ton ($8/ton) and managed to sell some quantity to regular customers thanks to firmer futures market. Most buyers still refrain from making large purchases though we received high number of price enquiries today. We think market might not be able to firm up too aggressively in the near term since buyers are resisting even the current prices.” Source from the company added that they also sold Middle Eastern homo-PP cargoes at $1010/ton CFR China, LC AS term.

It is confirmed that traders sold Indian homo-PP at $1000/ton LC AS term, bonded warehouse China, some $30/ton lower than official offers from the producer earlier this week. However, the deal is reported at Southern China area, where demand is evidently weaker than that of Eastern China area.

Import HDPE film cargoes, especial Iranian material started to arrive main port as players expected. This has pressurized sellers to step back on their offers in order to speed up sales process. A trader said his 5000 tons Iranian HDPE film cargoes are due to arrive by next week, “We cut our offers by $10-20/ton for this origin to $1140/ton CFR China, TT in advance with hope to encourage demand and managed to conclude some deals. There are more cargoes are coming and this is not a good sign for near term outlook.” Irregular HDPE injection cargoes from Brazil and Mexico continue to stand at the lower end of the market, though some cargoes are for November arrival, which buyers find it too risky to enter deal.      

In Southeast Asia, once again sentiment across the region follows mixed direction not only in term of between countries but also between PP and PE markets. Especially in the PP sector, there is an apparent slow down in Vietnam after a major Saudi producer committed price cuts, pausing most of purchasing activities as buyers prefer to withdraw to the side-line to analyze further development. Players reported that sales in Southern Vietnam – where about 80% of company in the plastics industry located, are rather sluggish. A trader commented, “Prices for this material are mostly at $1040/ton CIF term at the moment, however, we decided to not proceed with purchases as we have material arriving in the near term and we think the down trend just started.” Despite most sources contacted by CommoPlast have expressed a general expectation for further price reduction in the near term, they think the extent might not be significant with a buyer explained, “We see supply remain very limited and for this, import cargoes from dutiable origins might not breach below the $1000/ton threshold.”

Meanwhile, domestic Indonesian producer holds firm stance on their prices due to lack of cargoes availability and healthy demand. However, trading activities appear to be weaker than it was at the beginning of the week, from which distribution market started to see some minor discount of $10/ton from the latest price list. A seller informed, “We are still clearing backlogs at the moment and we are not having ready cargoes on hand while buyers appears to have more interest in prompt cargoes.” Another trader added, “Indonesia market is temporary insulated from the weakening trend in China and Vietnam recently as sales remain satisfactory here. We hope this condition could sustain in the coming day though some of our customers are more reluctant at the current market levels now.”

Regional PE market is quieter as players are waiting for major Middle Eastern maker to announce fresh price list next week. Expectation remains firm on LLDPE film cargoes due to limited supply and perceived of improved demand condition in the near term. A producer commented, “We are looking to lift August delivery cargoes by $30-40/ton compared to last month. At the moment, we are monitoring the market before conclude the final offers levels.”

Even players in Thailand are complaining about the lack of competiveness of local LLDPE film cargoes, from which international traders reported receiving enquiries from buyers in this country for import material.

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