Asia Daily PP and PE Overview 21 Sept 2016

In China, PP futures prices on Dalian Commodity Exchange finally find its way north, surging CNY72/ton ($11/ton) from yesterday to close at CNY7169/ton ($919/ton without VAT). LLDPE futures however, continue to edge lower in small extent of only CNY10/ton ($1/ton), touching CNY8705/ton ($1115/ton without VAT).

Domestic spot offers for both PP and PE remained largely stable from the previous trading session thanks to stronger futures trade. However, it is reported that buyers are still sourcing hand to mouth basis, which was reflected in a slow pace reduction in total inventories levels at major’s local markers warehouse. A converter in Fujian explained, “It appears that there is no significant spike in our end product business but just stable, and therefore we plan not to keep high inventories. We have purchased some homo-PP cargoes this week and would only replenish addition quantity if price come down by another CNY200-300/ton ($30-45/ton).”

Import homo-PP hold firm at the level $950-1000/ton CFR China, LC 0-90 days term, just that customers only can accept prices at the lower end of the overall price range. Players believed that chances for import offers to move higher in the near term are very thin if local market persists on the soft trend. On the other hand, traders fear of another slow week ahead as buyers might enter holiday mood again.

Players in the import PE market continue to see favorable demand condition for prompt LDPE film cargoes as a result of lacking availability. Other than that, transactions for other PE grades remain calm. A Southeast Asian cut HDPE and LLDPE film offers by $5-10/ton said, “We only received good number of inquiries for LDPE, many of which we couldn’t fulfill due to the recent shutdown at our plant. The remaining of the month might not bring any positive support to sellers, and we only hope for better demand condition after the National Day holidays.”    

In Southeast Asia, market sentiment has yet to show any sign of a pick up in demand though several overseas suppliers have announced fresh prices at stable to firmer levels compared to last month. In fact, a major Malaysian producer lifted LDPE film prices to Vietnam by $50/ton compared to last month, reaching $1250/ton CIF Vietnam, LC AS term. However, buyers are very reluctant to accept such hike claiming slow domestic market. A market source informed, “The prices are a little bit above market expectation, however the maker might be lacking of sales pressure due to the upcoming turnaround at their PE plant. We are negotiating to replenish some LDPE film cargoes only.” 

Meanwhile, a Saudi Arabia producer rollover their PE offers to Vietnam in the earlier trading session have come to price conclusion with $30-40/ton discount from initial offers. Import LLDPE film prices from Middle Eastern to Vietnam therefore have breached below the $1200/ton benchmarks for the first time sine July 2016 due to weak local demand. A trader confirmed, “We are selling in local market at only VND30,000,000-30,300,000/ton ($1220-1235/ton without VAT), FD Vietnam, cash term, which is similar to import offers at the moment. Even at that level, we fetch only a few deals. For this, we think offers from international suppliers stand above the $1200/ton threshold might face stiff resistance.”

Indonesian buyers also received fresh LLDPE film offer from a Saudi Arabia producer at $1260/ton CIF term, yet very few people portray willingness to proceed with purchases given competitive local cargoes. Meanwhile, a major domestic maker in Indonesia is planning to focus on local ground in the near term, instead of active in exporting their cargoes.

The regional PP market is also quiet. There are several international producers open new offers, mostly at stable to softer levels. A distributor offers homo-PP on behalf of a Saudi Arabia maker at $1000/ton to Vietnam informed, “Our customers are not responding. This could be due to sufficient inventories from previous purchases.” Another buyers in the country inform receiving Korean homo-PP at $1020/ton, some $40/ton reduction from last week. The source added, “This should not be interpreted as a turning point of the PP market, but just how market resist the upper end of the overall price range. We think PP prices have hit the ceiling and might only remain stable in the near term. Demand in local market is so weak that traders are giving larger than usual discounts to smoothen sales process.”