Asia Daily PP and PE Overview 20 Sept 2016

In China, futures prices on Dalian Commodity Exchange see little changes as the week proceed as both contracts for PP and LLDPE settled at mostly stable levels. January delivery contract for PP added only CNY10/ton ($1/ton) from the previous session to close at CNY7132/ton ($914/ton without VAT). LLDPE contract meanwhile lose CNY20/ton ($3/ton) to reach CNY8715/ton ($1117/ton without VAT).

Domestic spot offers for both PP and PE remained on the stable to soft track due to the fact that slow buying activities encourage traders to cut offers to smoothen sales process. This has disappointed many market players, who were initially hoping for a better demand condition after the mid-Autumn holidays. A trader in Ningxia complained, “Our customers show little urge to replenish material and we only managed to sell some quantity after committed to discounts. Many are showing their concerns over the upcoming new coal based PP plants though they are not having high inventories on hand at the moment. We feel really disappointed and confused about the upcoming trend.”

Import PP to China is facing strong pressure as continuous weakening domestic spot offers and US dollar parity deterring buyer’s interest. Homo-PP to China currently stands at $950-1000/ton CFR China, LC 0- 90 days term. Meanwhile, demand for LDPE film remains healthy, yet import offers above the $1200/ton threshold are having tough time attracting buyer’s attention. A Shanghai based trader sold Iranian HDPE blow molding at $1080-1090/ton CFR China said, “Our customers are pressuring for further reduction and we sold some quantity today. More Iranian cargoes would arrive by end of the month, hence outlook is not very positive for us.”       

In Southeast Asia, there has not been any significant improvement in term of purchasing activities across the region though couple of major international suppliers have announced October delivery offers at unchanged levels compared to last month.

Indeed, major Saudi Arabia producer rolled over their PE prices to Vietnam, at $1130/ton for HDPE film and $1220-1230/ton for LLDPE film, all based on CIF Vietnam, LC AS term; market respond however, unsatisfactory. This is due to the fact that import LLDPE film to the country for certain origins have been concluded at below $1200/ton threshold this week, evoking market expectation for discounts in spite of low availability. A trader in the country commented, “Domestic demand is very weak and this is pressurizing import market. We have previously purchased LLDPE film cargoes at the similar price levels arriving in the coming week. For this cargoes, loses is inevitable at the current condition. We plan to negotiate for serious discounts before committing to any fresh replenishment.”

Meanwhile, PE offers from Philippines are standing at the upper end of the overall price range at the moment, touching $1220/ton for HDPE film and $1270/ton for LLDPE film, CIF Vietnam, LC AS term. A market source based in Manila commented, “Despite comfortable supply for HDPE film in local Philippines market, we think the supplier is not focusing on export at the moment in defend of their position in domestic ground. We need to monitor market movement because if HDPE film stock continues to pile up, that is not a positive sign for the market. LLDPE film meanwhile remains quiet tight here.”

The regional PP market has not seen any abrupt movement from the aspect of both prices and buying interest. Softened upstream costs as regional crackers are due to restart putting buyers in a highly cautious stance. A buyer informed, “Our Middle Eastern homo-PP supplier offered us final price at $1010/ton CIF Vietnam, a $10/ton lower than initial prices if we were to buy. However, we are not very confident in the medium term outlook despite the implementation of the new import duties starting 1 January 2017. We are unable to move cargoes in local market recently.”