Asia Daily PP and PE Overview 18 Oct 2016

In China, futures prices again recorded impressive hike after several slow trading sessions. PP contract jumped CNY239/ton ($35/ton) to reach CNY7822/ton ($992/ton without VAT) and LLDPE contract surged to CNY9495/ton ($1204/ton without VAT), some CNY225/ton ($33/ton) up.

Domestic spot PP and PE prices have yet to respond to the latest development in the futures market, however, a number of traders reportedly suspended their offers towards the second half of the trading days, hoping to achieve higher margin tomorrow. A trader in Ningbo informed, “We did not implement hike immediately after the increase in futures trading, but postpone to tomorrow. We believed that market would remain firm for the rest of October, only November would see pressure from new coal based plants.”

In the import market, players believed that import homo-PP offers to China at the lower end of the overall price range would slowly move closer to the $1000/ton threshold. Weak demand in the previous trading days have triggered the ideas of re-exporting to Southeast Asia region, yet this remain an idea after local market sees signs of improvement.

Tight LDPE film supply continue to encourage overseas supplier to up adjust their offers to China, and in fact a major Qatari producer opens fresh price list at $10/ton hike on LDPE film cargoes, reaching $1260/ton CFR China, LC AS term. A trader commented, “We are still monitoring customer’s feedback, however, with perceived firmer domestic ground, we think buyers would accept this price increment.”

In Southeast Asia, market sentiment remains unchanged in spite of several major producers’ effort to increase their offers in the absence of sales pressure after achieving good deals in China last week. In fact, a major Saudi Arabia producer implemented some $30-40/ton hike on HDPE and LLDPE film offers to Vietnam and Malaysia today, however, initial market respond is not as good as expected. There is a strong sense of reluctance observed among buyers, with a Malaysian converter commented, “We did not expect such large increment in HDPE film prices. Other Middle Eastern suppliers are still approaching very aggressively to offer HDPE film cargoes, which might indicate high barrier to firmer prices. We prefer to wait and see due to sufficient stock on hand.”

Another Vietnamese buyer received offers at $1140/ton for HDPE film and $1220/ton for LLDPE film, CIF Vietnam, LC AS term informed, “We have replenished sufficiently in the previous week at lower levels, hence not in rush to make additional purchases. We managed to conclude a good number of deals in the domestic market, yet unable to increase our offers. Market might continue to remain on the firm track in the near term and we hope this would support domestic ground.”

Meanwhile, a major Thailand producer have also rolled over their HDPE offers to Vietnam after maintaining their offers unchanged to Indonesia in the previous trading day. A producer source informed, “We hold firm on our offers in spite of large number of lower buy ideas we received. This month we have very limited allocation due to the scheduled turnaround in November. We might not be able to supply full allocation to our regular buyers, even in December.”

The regional PP market appears to be on the up side and expectation for the near term outlook is rather bright with players focus on at least four major planned shutdowns in November. A Vietnamese buyer received Saudi Arabia homo-PP offers at $1020/ton CIF Vietnam, LC AS term for late December loading said, “The cargoes arrived at the time import duties already increased to 3% and it is very near to Lunar new year, therefore, we are not interested. There are many supporting factors for a stronger PP market in the coming month, and we remain hopeful that domestic ground could firm up. At the moment, we have attempted several times to increase our prices, all failed.”

In Indonesia, buyers are also seeking to buy additional quantity after seeing healthy demand in the nearby China market. Just that, most only planned a small purchase. Meanwhile, domestic traders are holding firm on the their prices, some have lifted their offers by $10/ton following the international trend. An international trader commented, “We received good number of purchase inquiries from Indonesian buyers, unfortunately we have sold out available allocation. We are currently waiting for our Saudi Arabia principal supplier to announce new prices.”