Asia Daily PP and PE Overview 19 Dec 2016

In China, PP futures plunged 5 per cent on the first trading day of the week and were temporary halted from trading after hitting the maximum daily lower limit. May delivery contract for PP slashed CNY486/ton ($70/ton) to reach CNY9243/ton ($1135/ton without VAT). LLDPE futures inched down CNY275/ton ($40/ton) to close at CNY10025/ton ($1231/ton without VAT).

In domestic spot market, players are feeling uneasy with such large and sudden fall in PP futures prices, which impacted trading activities in very negative way. Traders have cut offers for both PP and PE by another CNY50-100/ton ($7-14/ton) from last week in order to attract buying interest. “Buyers are completely inactive and we think market would take time to monitor further development before stocking up inventories for the Lunar New Year holidays.”

In the import market, homo-PP suppliers are still pushing prices up, especially for Middle Eastern origins, yet respond from buyers is very poor. A trader offered Saudi’s homo-PP at $1060/ton CFR China, LC AS term reported, “Our customers are not showing interest. Sellers might need to offer some discounts to activate stronger replenishment activities. We are not having sales pressure, therefore we are not rushing to cut price yet.”

The PE market meanwhile sees little movement with very limited number offers. Players are awaiting fresh offers from international suppliers before making decision.     

In Southeast Asia, market is calm on the first trading of the week though there are couple of import homo-PP deals reported at higher levels compared to last week. In fact, there is a 150 tons Middle Eastern homo-PP cargoes dealt at $1050/ton CIF Vietnam, LC AS term today. A distributor sold the cargoes informed, “We are not having material and in general supply from overseas sellers are tight. We think this trend would sustain into 2017.”

Meanwhile, locally held homo-PP cargoes in Vietnam has also firmed up in the range VND300,000-500,000/ton ($13-22/ton) from last week and availability is lessening. It is reported that buyers resisted the hike in import market are seeking for cargoes in local ground while traders are holding back their material in anticipation of continued firming trend in the near term.

In fact, regional buyers are still showing low acceptance toward higher offers, yet it does not make suppliers feel less confident. An Indian producer offers homo-PP to Southeast Asia at $1060/ton CIF term said, “Buyers are not accepting our prices, however, they are actively placing bids. This indicates their interest in replenishing inventories, therefore we would hold firm on our cargoes.”

In the PE market, major Saudi Arabia producers have rollover their offers from previous month in spite of visible weak demand across the region. One of the producer offered LLDPE film at $1210/ton and HDPE film at $1150/ton CIF Southeast Asia, LC AS term. Source close to the company informed, “Customers might resist our PE prices, however, we will monitor further development before taking further action. We are not having much allocation for PE since our plant only partially restarted after the maintenance shutdown.”

Another Southeast Asian producer added, “We have yet to open new offers for our HDPE film cargoes. However, our customers are placing buy idea at around $1130/ton now, which is slightly higher than previous week.” Market players also added that a Saudi maker has rejected Vietnamese buyer’s bid at $1120/ton for their HDPE film cargoes.        ?