Asia Daily PP and PE Overview 22 Dec 2016

In China, the rebound in PP futures price during the previous trading day appears to be short lived. Today, May delivery contract for PP nosedived CNY121/ton ($17/ton) just minutes before the closing to reach CNY8983/ton ($1105/ton without VAT), the first settlement below the CNY9000/ton threshold in weeks. LLDPE contract meanwhile, firmed up a little, adding CNY20/ton ($3/ton) to close at CNY9890/ton ($1216/ton without VAT).

Domestic spot prices continue to weaken with traders cutting PP and PE offers by another CNY50-100/ton ($7-14/ton) to smoothen sales process. Buyers are making replenishment, but not very aggressively.

In the import market, USA homo-PP cargoes again appears in the market at rather competitive levels compared to Middle Eastern origin, standing at $1020-1030/ton CFR China, LC 90 days term, yet no deals were heard so far. “Futures traders are releasing their cargoes to spot market due to weaker futures prices this week. This could be an issue if material continue to flow this direction in the near term,” a trader commented.

Meanwhile, sellers active in the PE market claimed to have achieved satisfactory sales result today, especially in the local ground. Import prices at the upper end are not fetching sufficient buying interest as buyers are complaining about the exchange rate. A trader offered Korea’s LLDPE film and LDPE film at $1180 and $1320/ton CFR China respectively informed, “Initial respond is weak, however we believed that customers would come back to make at least a small replenishment.”

In Southeast Asia, buying activities are emerging though buyers remain hesitant toward higher priced cargoes. More regional and overseas producers open fresh offers, mostly at higher levels compared to last month. In fact, a major Southeast Asian maker lifted PP and LDPE prices by $20/ton from last month and it is reported that respond from buyers is rather positive. A distributor informed, “The supplier’s offers are apparently more competitive than other peer offers from Southeast Asia, therefore customers are confirming their purchases very fast. This would possibly keep the market on the firm track in the near term.”   

Meanwhile, a Saudi Arabia producer revised their PP and PE offers to Vietnam upward just a day after announcing January delivery prices to the country. In the latest price adjustment, HDPE film surged $60/ton from the initial offers to reach $1200/ton while homo-PP added $20/ton to reach $1060/ton, all based on CIF Vietnam, LC AS term. One of the explanations for such move is due to the plant issues. As CommoPlast reported last week, Saudi’s PetroRabigh is facing difficulties in bringing its PE line on-stream after 20 days maintenance shutdown since late November. Until today, the troubled plant still remains off-line, according to a source close to the company.

A distributor commented, “We are still collecting bids from customers and buyers are very concern over such large hike in HDPE film price. Thing should come back to normal once the plant obtains stable run rate.” To reiterate, it appears that HDPE film market is holding a firmer position than LLDPE film, making the gap the gap between the two grades narrower now.

In the PP sector, the general sentiment remains the same. Yet, offers at the lower end of the overall price range are firming up, and prices below the $1050/ton threshold are disappearing. However, it seems buyers are not very confident in the market prospect pointing to the traditional low season after Lunar New Year.

In Indonesia, local homo-PP supply is not as ample as a month ago and with the up coming shutdown at Polytama’s PP plant in January, players are expecting better demand condition in the coming month.