Asia Daily PP and PE Overview 06 Sept 2016

In China, futures prices on Dalian Commodity Exchange rebounded from a depressing week today. January delivery contract for PP leaped CNY152/ton ($23/ton) to settle at CNY7311/ton ($935/ton without VAT). LLDPE futures increased CNY130/ton ($19/ton) to reach CNY8835/ton ($1130/ton without VAT).

Domestic spot market gains the support from stronger futures trading, as price lists remain stable, except LDPE film prices added another CNY50/ton ($8/ton) from yesterday. It is reported that sentiment is improving and traders begins to see better sales for locally held cargoes. A trader commented, “We managed to conclude more deals for PP in domestic market today though prices above the CNY8000/ton ($1024/ton without VAT) are facing resistance. Import ground is calmer despite stable prices we hold for Saudi Arabia’s homo-PP at $970/ton CFR China term. We believed that buying interest would improve as buyers resume operation after the G20 Summit.”

Demand for import HDPE to China also sluggish, even HDPE yarn, which fetched great buying interest in the past weeks, now witnessing little deal concluded. A trader offers Thailand HDPE yarn at $1165/ton CFR China said, “We merely make any profit out of these cargoes, still our customers are not responding. Iranian’s HDPE blow moulding is widely available at very competitive prices. We fear that this sector might remain under pressure for the remaining of this year.”  

In Southeast Asia, market sentiment remains quiet as the week proceed with very limited number of new offers observed. It is reported that PE demand in Philippines is healthy as buyers are replenishing material for the year-end season. A trader received Middle Eastern LLDPE and LDPE film offers at $1200/ton CIF Philippines, LC AS term said, “Local supply is still not stable and we are looking to source some alternative cargoes from import market. Demand here is healthy, just that LLDPE film supply appears to be tight.” The source added that most suppliers are holding very firm on their prices claiming lack of availability.

Meanwhile, in Indonesia, there are market talks that a major local producer reportedly switches to make metallocene grade instead of LLDPE film; however, this is not confirmed at the time this report is published. Market sources said that this could be a best option for non-integrated producer as regular grades yield minimal to negative margins amid strong ethylene costs. A trader informed, “Local trading activities are slow and we hope tightened supply would boost general sentiment in the near term.”

The regional PP market also sees little movement from the first trading day of the week. Vietnamese buyers continue to discuss the possible impact of the scheduled increase in import duties for homo-PP to the country. An additional of 2 per cent from the current duties initially triggered market expectation that buyers here would take position before the implementation of new import duties rate. However, not all buyers are showing such willingness. A trader said, “Domestic market is very slow at the moment and we have yet to plan for large purchases as it is really risky. We need to monitor further movement before forming any concrete decision.” It is heard that international sellers are surveying market acceptance with offers to only selective customers.

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