Asia Daily PP and PE Overview 07 Sep 2016

In China, futures prices on Dalian Commodity Exchange extended the bullish trend for contract 1701. PP futures for January delivery added CNY43/ton ($6/ton) from yesterday to settle at CNY7318/ton ($938/ton without VAT) while LLDPE contract gained CNY100/ton ($15/ton) to reach CNY8865/ton ($1136/ton without VAT).

Domestic spot offers for both PP and PE are unchanged from the previous trading session while LLDPE and LDPE film prices appear to have reached the peak after weeks of continuous increasing. This raises questions amongst suppliers for the fact that the agriculture film season has started, which were expected to support further hike. A trader said, “Buyers are resisting current prices and we only can conclude deals after some CNY50-100/ton ($8-15/ton) discounts. In spite of that, sales are satisfactory today. We visited some of our customers, good news is that most have lifted operation rate to 60% and might improve further in the coming week. We notice that double layer proofed film makers are more aggressive in replenishing material this week.”

There are little movement in the import PP market, while traders are complaining about slower purchasing activities. Several buyers have expressed their plan to replenish material for October arrival as part of pre-holiday buying. A trader said, “We sold more than 300 tons of Thailand HDPE yarn at $1165/ton CFR China, LC 90 days term after days of holding firm stance. This cargo shall arrive by 25 September, just before market prepares to go off for the long National Day holidays. Other customers prefer to wait until next week before making purchases.”

It is interesting that Nigerian’s PE cargoes show up in China market today at very competitive prices. Yet, long shipping time has had many buyers hold back their immediate decision. Some have brought up the uncertainties in quarter four to be the reason they need to consider carefully before making purchases for deep seas cargoes.

In Southeast Asia, there are more activities observed in the market today after several overseas suppliers open new offers again, although sentiment in Indonesia remain calm. A number of deals reported for homo-PP in Vietnam as some buyers pushed ahead with purchases to avoid increase in import duties starting Jan 2017. A converter informed, “We bought 600 tons of Saudi homo-PP after obtained $10/ton discount from the initial prices. These cargoes would arrive before the increase in import duties. We are monitoring market movement before making further decision. Demand for our end product is regular at the moment.” It appears that Vietnamese buyers have accepted prices above the $1000/ton threshold as several other suppliers also reported to have sold dutiable cargoes at the range $1010-1020/ton CIF Vietnam, LC AS term.

Indonesia market remains quiet despite the recent production issues at one of the main PP plants in the country. Traders are complaining about slower sales result compared to last week, especially for homo-PP yarn. A converter in the country informed, “Futile harvesting this season resulted in weaker demand for woven bags, which in turn dampens buying interest for homo-PP yarn. However, fertiliser sector is still doing well. We have purchased sufficient material at the moment; hence we are not in rush to make additional purchases though market is moving up.”

In the regional PE market, a major Saudi Arabia producer reportedly allocate additional LLDPE film cargoes to Vietnam twice this week, selling at $1200/ton CIF Vietnam, LC AS term, which provokes mass question among buyers regarding the state of LLDPE supply in the region. A trader commented, “We have been informed about limited availability of LLDPE film for sometime now, however, this week we feel supply is improving. Even local market seems soften a little compared to last week.” Another international trader opined otherwise, saying, “We do think LLDPE film supply is not as comfortable as other PE grades considering the recent production switches at major Southeast Asian plants. Meanwhile, our customers in USA and Europe are also facing difficulties in locating this grade. We think for this reason, market might sustain the stable to firm trend in the near term.”

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