Asia Daily PP and PE Overview 02 August 2016

In China, futures prices on Dalian Commodity Exchange surprisingly overturned the trend to record the first significant loses in the past five sessions. September delivery contract for LLDPE plunged CNY255/ton ($38/ton) to settle at CNY9075/ton ($1166/ton without VAT). Meanwhile, PP contract has a stronger grip on the trend to shred only CNY17/ton ($3/ton) from the previous session, close at CNY8315/ton ($1069/ton without VAT).

Domestic spot offers for both PP and PE have yet to respond to weaker futures trading today as price list indicated some increases of CNY100-150/ton ($15-23/ton) for PP and CNY50-150/ton ($8-23/ton) for PE. However, softer futures market technically put a hand-break on purchasing activities as buyers decided to monitor further development before taking additional quantity. A trader in Hebei reported, “The number of deal we could conclude today is lower than the previous trading sessions. Yet, we are not expecting to see drastic downward movement as long as futures market hold firm to the current state.”

Meanwhile, there is little movement reported in the import market though homo-PP prices at the upper end of the overall price range are facing stiff resistance, in which sellers have decided to reduce offers to match market acceptance levels. A Middle Eastern maker cut their offers by $20/ton to reach $1040/ton CFR China, LC AS term said, “The market is so volatile that we see prices have increased throughout the slow demand season. Prices at the upper end of the price range are now attracting little buying interest, and we hope to smoothen sales process with this adjustment.” There is high level of uncertainties associated with the near term outlook, especially when there is no definite course for the market during the G20 Summit, the source added.

Market sources reported seeing very limited number of new LLDPE film offers since the week starts. HDPE is on the other hand, continues to see more cargoes arriving main ports, exerting a renewed downward pressure on the market. A trader in Guangdong received bid for Iranian HDPE film at $20/ton below initial offer said, “We could not accept the bid immediately given thin margins. At the meantime, we are also negotiating with USA supplier to get some discounts on fresh deals to balance the costs. There are number of Iranian cargoes are due to arrive in the coming days, and this could pressure the market further.”

In Southeast Asia, market sentiment remains weak as buyers adopted a more cautious stance after the energy market hit the lowest level in three months. Couple of producers down adjusted their PP prices to the region from last week with aim to stimulate buying interest. The strategy appears to work as more deals are reported in the PP market today, especially in Vietnam. Indeed, buyers in this country are showing some interest in Saudi homo-PP after a major producer adjusted price down to $1010/ton level in the previous trading session. A distributor meanwhile sold Middle Eastern homo-PP parcel at $1020/ton CIF Vietnam, LC AS term said, “Buyers are not very aggressive in taking cargoes, however we managed to conclude 600-700 tons material today. We think room for further reduction is rather small, especially while China market remains relatively stable, this is why our principal supplier refused to commit additional discount.”

Two regional producers also stepped back on their PP offers by $10/ton from last week due to sluggish buying interest with a trader reported, “Trading activities have been slow and we hope with the latest price adjustment, buyers would become more willing to replenish cargoes.” However, several Indonesian buyers surveyed by CommoPlast would prefer to hold wait and see stance due to sufficient inventories while hoping to achieve further discount in the coming days.

There are very limited numbers of new LLDPE film offer observed in the region mostly at stable prices. However, HDPE film cargoes appears to loose steam and in fact, sellers are lowering their offers amid lethargic demand. A Malaysian buyer received Saudi Arabia HDPE film at $10/ton lower than last week at $1140/ton CIF Malaysia, LC AS term commented, “We are having sufficient material to cover August production, hence we might hold our purchases a while longer. We are a little lacking of confidence in near term outlook as most of our regular suppliers are very active is collecting buy idea instead of giving official prices.”

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