Asia Daily PP and PE Overview 12 Dec 2016

In China, the firming trend in futures trading extends into the new week. Contract 1705 for May delivery surged CNY255/ton ($37/ton) for PP to reach CNY9581/ton ($1185/ton without VAT). LLDPE futures added CNY165/ton ($24/ton) to close at CNY10400/ton ($1286/ton without VAT)

In domestic spot market, suppliers started taking more significant measures in adjusting their prices, implementing CNY300-400/t ($43-58/t) on PP cargoes. For PE, the price increment range stands between CNY100-300/ton ($14-43/ton). Many traders reportedly limiting the offered quantity in expectation of continuous firming market in the coming days; converters on the other hand have shown resistance. Would this discourage suppliers from keeping firm stance on their cargoes? It is very less likely, players said.

A trader said, “Most of the PE cargoes below the $1100/ton threshold from international suppliers have been sold out, hence the pressure on the market is less now. With the current conductive macro environment and low inventories pressure, we believe the firming trend would sustain.”

Meanwhile, import homo-PP from Middle East to the country firmed up $30-40/ton week on week basis, reaching $1060-1080/ton CFR China, LC 0-90 days term. With such hike, the gap between spot and futures market is now narrowed to about CNY100/tom ($15/ton), which caused some reluctance among cargoes takers. An international trader commented after opened new offering said, “Our customers are still considering whether to make purchases at the new levels. We are confident about the deals. We think with the current futures and crude oil prices, market would hold firm in the near term.”  

In Southeast Asia, market remains quiet on the first trading day of the week with Indonesian and Malaysian players are away for holiday. There are very limited number of new offers reported in the import market, however, news about strong buying interest in China has some positive influences on buyers’ expectation.

In domestic Vietnam, traders here are lifting locally held Saudi’s homo-PP cargoes ahead of the implementation of the new import duties rate, however, buyers not very cooperative. A trader offered Saudi Arabia cargoes at VND27,000,000/ton ($1085/ton without VAT) added, “Domestic market has been standing low for too long and we think with firmer stance from import market, it make sense for local suppliers to lift offers. We are not seeing aggressive buying interest, yet we plan to hold firm stance on our cargoes. The absence of import material due to more attractive China demand means local supply might tighten in the coming weeks.”

Despite the firming trend observed in the China market, plans to increase prices to Southeast Asia have yet to be materialised and it appears to be more challenging than it might traditionally be.  An international trader informed, “We are having some cargoes on hand at the moment, yet buyers are placing bid at well below the costs. We hope surging energy market would stimulate buying interest, however, at the moment, buyers are still holding wait and see stance.”

Firming crude oil and ethylene costs appear to have supported the PE market from further reduction. There are not many suppliers offering new prices to the market on the first trading day of the week, however, buyers’ expectation for the near term outlook has changed slightly. A converter commented, “We have not received any offers from regular suppliers, however, we think with the current crude prices, market might have found its bottom levels.”