Asia Daily PP and PE Overview 23 Aug 2016

In China, futures prices on Dalian Commodity Exchange regained its momentum as contract 1701 for January delivery inched up after a surprising drop on Monday. PP futures settled CNY113/ton ($17/ton) higher while LLDPE contract increased CNY155/ton ($23/ton). Both contracts settled at CNY7601/ton ($977/ton without VAT) and CNY9105/ton ($1170/ton without VAT) respectively.

Domestic spot offers remain largely stable except LDPE film is reportedly up CNY50-100/ton ($8-15/ton) compared to yesterday. A good sight is that local traders continue to receive good number of purchase enquiries.  A trader in Hebei reported, “Some of our customers, who initially planned to replenish material only by end of this month have actually come back to make purchases. Indeed, we are happy with the number of deal concluded today.” Meanwhile, trading activities in Hangzhou surrounding area are expected to be slower this and next week as many converters are shutting down in line with government guidelines ahead of the G20 Summit. This signals a possibility that buyers would return by second week of September to find themselves in need to restock material. September outlook therefore appears to be positive to many players in the country.

In the import market, several sellers have attempted to lift homo-PP prices from dutiable origins, however, bumped into stiff market resistance as buyers keep requesting to close deal at previous prices. A trader sold Saudi homo-PP yarn at $970/ton CFR China informed, “We were initially fear that the delivery of September ended futures contract would dampen the demand, however it seems the market has found a strong support to hold on. We managed to close a good number of deals at stable level compared to last week and with such firm stance in the local ground, we believe international suppliers would hold their offers steady.”

Import PE to the country see little movement with players expected to see more Iranian HDPE blow molding to arrive the market in the coming week. Comparatively, import HDPE film to China is still being traded at premium over Vietnam market.

In Southeast Asia, the general sentiment remains mostly unchanged from the previous trading session, though activities in regional local markets are reported to be smooth. Couples of regional suppliers are planning to implement some small hike on their September delivery shipment on the back of lacking sales pressure. A maker informed, “We might announce fresh offers within these two days. Considering the current inventories levels on both sellers and buyers’ hands, in addition to the support from upstream market, we plan to hold firm stance on our prices. Last month our prices were a bit high, which market might find it difficult to accept at the moment. We are monitoring further before set the official announcement.”

Meanwhile, players reported seeing very limited number of new offers from Middle Eastern supplier, and that prices below the $1000/ton threshold are gradually fading away. An international trader is collecting bid for Saudi Arabia homo-PP at $990/ton CIF Vietnam, LC AS term, however buyers are not confidence that the supplier would accept this level given the current market condition. Domestic PP market in Vietnam is reported to be pretty happening with traders hold back their offers for yarn grades while buyers continue asking to conclude deal at previous price levels. Despite such bright outlook, some buyers still refrain from taking deep seas cargoes due to fear of uncertainties during quarter 4.

International PE suppliers are planning for September price announcement, yet some have planned for a rollover from last month or a small reduction to reflect an improvement in supply. A major Saudi Arabia maker revealed fresh price list to Vietnam at reduction of $10/ton for LLDPE film and $20/ton for HDPE film compared to last month. A buyer received the new offer commented, “Our supplier appears to have better supply this month, therefore we expect larger than usual discount. We plan to buy some LLDPE cargoes only as HDPE demand is very bad in local market at the moment.”

Another major Middle Eastern maker informed, “We plan to rollover our LLDPE offers given high feedstock costs and general tight supply. We expect that supply condition might improve in quarter 4 provided there is no other issues at our plants.”

In another news, Saudi’s Sadara Chemical would delivery its first LLDPE c6 film cargoes to Southeast Asia market by end of September, sources said. The company would reach full operation rate at its newly developed petrochemical plant by end of 2016. With the capacity to produce 1.5 million tons/year of ethylene, 400,000 tons/year of propylene, 750,000 tons/year of LLDPE and 350,00 tons/year of LDPE, the complex is the first to use naphtha as feed in the Middle East region.

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