Asia Daily PP and PE Overview 06 Oct 2016

In Southeast Asia, more transactions are reported as the week proceeds mostly at stable to softer levels for both PP and PE cargoes. However, regional buyers do not appear to be very aggressive in taking cargoes claiming weak end product demand and concern over near term outlook. For this, customers are pushing for additional discount on their purchases. An international trader sold Iranian LLDPE film cargoes to Vietnam at $1135/ton CIF Vietnam, LC AS term, some $15/ton lower than initial offers said, “Demand is very weak at the moment that make near term outlook very questionable. We only hope the return of Chinese buyers in the coming week would stimulate the general sentiment.” Several converters in the country have reported a drop in end product businesses by approximate 20-30% compared the same period last year, hence the reluctance to build up stock just get amplified.

Meanwhile, another international trader reported to have sold a good quantity of Saudi Arabia LLDPE film at $1160/ton CIF Vietnam, LC AS term. The source added, “Our principal supplier is planning to take the PE plants off-stream for two weeks by mid of October, in line with the shutdown at one of the crackers. This might affect the export allocation in the medium term. We think market therefore gain more support to sustain the stable trend.”

The PP market remains largely stable though offers at the upper end of the overall price range are facing stiff resistance. Dutiable cargoes to Vietnam at below the $1000/ton threshold are very scarce this week, yet Saudi homo-PP yarn at $990/ton to Indonesia is repeatable. An Indonesian trader commented, “Some local traders are offering larger than usual discount on their forward selling cargoes, though we personally do not see the need. Demand has yet to pick up, but the outlook should be firm given the current energy market situation.”

Many regional players shared similar opinion regarding the near term outlook based on surging energy values. A regional buyer added, “Besides, our Saudi Arabia producer also informed of limited availability this time, from which they refused to commit to large discounts to close deals. We think PP has regained some steam from previous loses and might be in a better position than PE in the near term. However, we prefer to monitor movement in China market before making any major decision.”