Asia Daily PP and PE Overview 03 August 2016

In China, Dalian Commodity Exchange extended the soft trend with LLDPE futures continue to be the spearhead. September delivery contract settled CNY150/ton ($23/ton) down for LLDPE to reach CNY9080/ton ($1167/ton without VAT). PP futures meanwhile see little changes at CNY8311/ton ($1068/ton without VAT), only up CNY6/ton ($1/ton) compared to yesterday.

Falling LLDPE futures have exerted downward pressure on physical spot market as price list from domestic producers showed CNY50-100/ton ($8-15/ton) reduction for PE cargoes. Spot PP prices remain unchanged from the previous trading session. Buyers are decelerating purchasing activities, from which total PP and PE inventories at major local marker’s warehouses are only reduce approximate 2% since beginning of the week, a private data showed.

A Shanghai based trader reported, “Most converters are still complaining about weak end product demand and we see only large scale manufacturers with long term end product contract are active in replenishing material. We are monitoring development at the upstream market with hope to gauge the likely direction of the downstream PP and PE market; however it is very challenging since domestic ground is mostly steered by overly speculated futures trading.”

In the import market, weaker trading activities in the near-by Southeast Asia region has encouraged sellers to adjust their PP prices to China. Middle Eastern homo-PP stand at the lower end of the overall price range see $10/ton discount after the upper end received $20/ton reduction yesterday. Meanwhile, trader sold Indian HDPE yarn at $1160/ton CFR China, LC 90 days term said, “We merely earn any profit from this cargoes, however we plan to deplete the remaining quantity in the near term as the widely available Iranian material is affecting near term outlook.”       

In Southeast Asia, falling energy values sent shivers to the polyolefins market and buyers tend take more cautions when it comes to fresh purchases. International PP suppliers continue to down adjust their offers to the regional market amid diminishing buying interest. Indeed, a Middle Eastern producer cut homo-PP injection prices to Vietnam by $20/ton compared to yesterday, marking the third price adjustment since the maker announced August delivery cargoes last week. The latest price touches the $1000/ton mark, sparking concern about a possibility that import homo-PP to the region might breach below this threshold in the near term. A Vietnamese buyer purchased 100 tons cargoes at the new price commented, “We are just buying in small quantity in expectation of seeing further reduction in the coming weeks. Demand in local market is rather weak at the moment due to improved supply from the arrival of previous purchased cargoes. Many domestic traders are offering discount to entice buying appetite.” International supplier has also attempted to offer the cargoes to Thailand at $1000/ton CIF, LC AS term, however, buyers in this market placed bid at well below the initial prices claiming high probability of weaker trend in days ahead.

Meanwhile, supply for homo-PP in local Indonesia market is reported to be tight though players are expecting to see some relief in the coming weeks with the arrival of import cargoes. A buyer in the country informed, “We have been checking with local sellers to replenish some homo-PP yarn cargoes, but most replied with lack of allocation. We are running low on inventories now, hence we are considering to purchase Singaporean cargoes after the supplier slashed offers by $20/ton from yesterday.”

The regional PE market has not been spared from weakening energy market in spite of the fact that the number of LLDPE film offer from international suppliers remains limited. This is regarded as one of the primary factors holding LLDPE film market on the stable trend in the near term while sellers are already cutting HDPE and LDPE film prices. A Malaysian producer offer LDPE film at $1250/ton CIF Vietnam, LC AS term, down $20/ton from earlier week and $50/ton from last month. A source close to the company reported seeing very little respond from the buyer’s side and expressed concerns over further downward pressure in days to come.

Meanwhile, the LLDPE film hotness in local Vietnam is also loosing steam as traders are cutting offers between VND400,000-600,000/ton ($18-27/ton) compared to last week in an attempt to stimulate trading activities. A trader commented, “Buyers are very much holding tight on the wait and see stance after the energy market tumbled to the lowest level in three months. We did not receive any bid today, which we find it to be strange, considering the current state of supply from international suppliers. We have yet to proceed with additional replenishment this week.”

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