Asia Daily PP and PE Overview 30 Aug 2016

In China, futures prices on Dalian Commodity Exchange slid by CNY140/ton ($21/ton) for LLDPE contract to settle at CNY8755/ton ($1120/ton without VAT). Meanwhile, January delivery contract for PP inched down CNY36/ton ($5/ton) to reach CNY7262/ton ($929/ton without VAT)

Local spot offers for PP and PE remained unchanged from the previous trading session, except LDPE film prices continue to escalate CNY100/ton ($15/ton) on healthy demand and tight supply stemming from several major shutdown. It is reported that a number of domestic traders have committed to forward selling homo-PP cargoes for early December delivery at the price levels of CNY1000/ton ($150/ton) lower than current spot market. This, together with weakening futures market has rocked buyer confidence.

A trader in Shanghai said, “We tend to focus on the near term for now. Most of our customers are having shutdown for the G20 Summit, however restock is necessary once they resume production. Buyers are not holding high inventories these days, from which basic order would continue to support the market.”

In the import market, homo-PP offers below the $970/ton marks is becoming scarce, especially for regular origins. Yet, higher levels are facing stiff resistant as buyers are becoming more cautious amid falling futures market. Demand for HDPE film in the import market is reported to be weak despite ethylene costs to the region has hit multi month high recently. A trader offering Saudi Arabia HDPE film at $1140/ton, CFR China, TT in advance said, “Our customers are rather reluctant claiming high risk associated with deep-seas cargoes. We find that among the PE film grades, LLDPE and LDPE film are still attracting greater buying attention. We hope September could demonstrate better demand condition before the long National Day holidays in Oct.”

In Southeast Asia, market sentiment is rather calm ahead of the National Day holidays in couple of markets. Buyers in Malaysia are generally planning to replenish inventories after a major local producer announced September delivery cargoes on the first trading day of the week with larger than expected reduction. A flexible packaging manufacturer in the country informed, “We have not made any purchases past month, hence we need to secure some cargoes this week to maintain stock level. Demand for our end products is regular at the moment. We think local producer might be firm on their cargoes for the remaining of the year due to a scheduled shutdown in late quarter 4.”

Meanwhile, there is little movement in the import PE market since most Middle Eastern makers have announced and concluded businesses for September. A Vietnamese buyer received Saudi LLDPE film at $1250/ton CIF, LC AS term said, “Our supplier is collecting bids at the moment. We feel it is very difficult to accept this price level though LLDPE film supply remains tight. Most domestic traders are facing difficulties in adjusting local offers up, hence we need to consider very carefully before taking position.”

The regional PP market is caught in the position that most suppliers are having tough time up adjusting their offers despite propylene costs based on FOB Korea term reaches the highest level in a year. Several international suppliers have tried to lift their prices, however there are no deals reported at the new offers. A Vietnamese trader informed, “It is really confusing as market is moving asynchronously. We are still receiving offers for non-dutiable homo-PP cargoes at well below Indian material this week. At the meantime, domestic distributors are cutting prices for locally produced cargoes which hampered buyers confidence just when market started to pose more optimistic expectation for September.”

In Indonesia, it is reported that local traders are holding very firm on their prices claiming lack of material, especially for homo-PP injection and film grades. Buyers on the other hand, have purchased sufficiently, hence withdraw to the side-line to monitor further development. A trader informed, “Trading activities in local ground is kind of calmer today. We think market would sustain the stable trend in the immediate term; however we do hope to see improved demand in the coming month.” 

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