Asia Daily PP and PE Overview 22 Sept 2016

In China, futures prices on Dalian Commodity Exchange turned softer today with contract 1701 for PP inched down CNY68/ton ($10/ton) while LLDPE futures slashed another CNY100/ton ($15/ton). Both contracts settled at CNY7117/ton ($912/ton without VAT) and CNY8625/ton ($1105/ton without VAT) respectively.

A positive sign from domestic spot market is that there are more trading activities today and the number of deals concluded are satisfactory, players said. More converters started to take position in an attempt to build up inventories before the long National Day holidays.

A packaging manufacturer in Zhejiang informed, “Our suppliers maintain homo-PP offers stable, however, willing to provide free delivery; hence, we decided to purchase additional quantity. We are not aggressive in building up inventories as outlook remains uncertain.” Another trader added, “We do receive better number of purchase inquiries and we managed to deplete a good number of domestic cargoes. Our only concern is the sustainability of this trend.”

Meanwhile, demand for import cargoes is not as strong as it is in the local ground, which player blamed the weakening Chinese Yuan to be the cause. Some traders have decided to down adjust their offers to attract buyer’s attention. A trading house offer Saudi Arabia homo-PP yarn at $955/ton CFR China, LC AS term, down $5/ton compared to yesterday said, “Our customers prefer to buy prompt cargoes, therefore, we could not conclude many deals even with discount.”

The HDPE film market has not revived from the weak demand and comfortable supply condition. Even LLDPE film market is not showing much improvement. It supposed that the agricultural film season in Northern China has started and demand should have picked up, yet a trader in Linyi said, “We visited our agricultural film customers recently and most of them are still operating at 50% capacity. Traders have about a month to deplete inventories before the season end by second half of October. We hope buying activities would improve in the near term.”

In Southeast Asia, regional buyers are proceeding with purchases for October delivery PE cargoes after several international suppliers announced fresh prices in the earlier trading sessions. It is observed that most deals are concluded with larger than usual discount amid persistent slow demand in local markets. A Vietnamese buyer received final prices for Saudi LLDPE film cargoes at $1190/ton CIF, LC AS term informed, “Our suppliers offered $30-40/ton discount from initial offers; however we did not proceed with purchases as local market is too weak. Improved supply condition has had many traders cutting domestic prices to smoothen sales process. The margins are very thin now.” The source also added that buyers are actively placing bid for import LLDPE film to the country at the levels of $1180-1190/ton, and this could set the new benchmarks for this month after almost three consecutive months being traded at above the $1200/ton threshold.

Meanwhile, a Malaysian converter received Middle Eastern LLDPE film at $1180/ton CIF term informed, “We have purchased some quantity from another supplier at $1190/ton yesterday and we might consider replenishing additional cargoes. Our end product business is stable.” Players here also reported about slow local demand condition, yet domestic producers might hold very firm on their offers given the upcoming maintenance shutdown that might curtail supply.

Import homo-PP to the region still remains on the stable to soft track while buyers are becoming less active in making fresh purchases. South Korean homo-PP injection offered to Vietnam at $60/ton reduction from last week, reaching $1020/ton CIF, LC AS term, which educe even more concern amongst buyers. A trader informed, “Prices swing too significantly and we are just not confident enough to make purchases. We are having some quantity on hand and might postpone our restock activities till next week.”

Sentiment in the Indonesia market is calm and buyers are very reluctant to restock, claiming sufficient inventories and slow end product business, especially those supplying woven bags to agricultural sectors. In another news, Chandra Asri is scheduling a maintenance shutdown at its 480,000 tons/year PP plant in November 2016. It is unconfirmed on the exact duration, however sources close to the company said the plant might remain offline near to a month.