Asia Daily PP and PE Overview 16 Dec 2016

In China, futures market continue to move lower on the final trading day of the week though the range of reduction seems smaller. Contract 1705 for PP inched down CNY77/ton ($10/ton) to reach CNY9632/ton ($1183/ton without VAT). Meanwhile, LLDPE contract slid CNY60/ton ($9/ton) to close at CNY10150/ton ($1246/ton without VAT).

New spot offers in the distribution market showed CNY50-100/ton ($7-14/ton) reduction from the previous day for both PP and PE. It is reported that most BOPP converters are operating at high rate and enjoying healthy profit margins while PE sector is a little sluggish. One interesting point is that the price gap between PP and LLDPE on both spot and futures markets are unusually low. At the moment, the gap is only slightly above CNY500/ton ($72/ton) – half of the usual range. Players therefore expect to see some sort of correction that would bring back the balance.

“We are still not seeing any sales pressure from the supplier’s side, which means prices might not fall in large scale at least in the near term, especially for PP. Just yet, we are unsure about the outlook in the coming month, once converters completed pre-Lunar New Year replenishment.”

In the import market, offers from international suppliers for homo-PP halt the up trend to hold mostly unchanged today. Meanwhile, HDPE film offers for Thai and Taiwanese origin added $20/ton to reach $1200/ton CFR China, LC AS term. A trader in Shanghai reported, “Buyers simply show no interest in these prices. We think market again entering the wait and see stage. There will be a good quantity of material arrive before and after the Lunar New year, hence buyers are not aggressive now.”     

In Southeast Asia, major regional and international producers started to open January delivery offers for both PP and PE, mostly at stable to softer levels compared to last month amid weaker buying interest. A major Saudi Arabia rollover PE offers to Vietnam from last month at $1210-1220/ton for LLDPE film and $1150/ton for HDPE film, all based on CIF, LC AS term. A buyer commented, “We could not even achieve this level in domestic market and we think the supplier would face real tough time to convince buyers to accept such prices.” Meanwhile, the producer does not appear to be having any sales pressure with a distributor added, “We plan to hold firm on the cargoes given very small allocation this month. We could not meet all buyer’s quantity requirement at lower prices.”

Major Malaysian maker has rollover LDPE film offers to Indonesia market from last month while reducing HDPE film price by $10/ton, to reach $1350/ton and $1190/ton, CIF, respectively. Players are not responding very positively to the new offers claiming more attractive offers in the local market. A buyers commented, “Most buyers here are on holiday mood and local prices are very competitive, especially for HDPE film. Therefore, we think it is very difficult for international suppliers to obtain such high offers.”

In the regional PP market, there are very limited numbers of new offers observed. Purchasing activities remained low; therefore, prices at the upper end of the overall price range are facing difficult time attracting buying interest. At the meantime, previous lower end offers are disappearing from the market. Vietnamese homo-PP concluded at $1120/ton CIF Indonesia, some $20/ton up from the previous week. A converter in the country commented, “Our suppliers for Vietnamese homo-PP lifted offers to $1150/ton claiming healthy sales to China. We think in the near term, very less likely that price would come down significantly, hence we decided to take a small quantity before going off for the holidays.”

Meanwhile, there are 3000 tons of Indian homo-PP yarn and injection are being offered to Vietnam at $1080/ton CIF, LC AS term. “We think this is way above the market acceptance levels. Local traders are offering cargoes arrive within December at much more competitive prices now,” a buyer commented.