Asia Daily PP and PE Overview 26 Dec 2016

In China, a positive sign on the first trading day of the week is that futures prices firmed up considerably. May delivery contract for PP gained CNY161/ton ($23/ton) to close at CNY9053/ton ($1113/ton without VAT). Meanwhile, LLDPE contract settled at CNY200/ton ($29/ton) higher to reach CNY10045/ton ($1253/ton without VAT).

In contrast, spot offers for PP in local ground extended the weakening trend, loosing CNY100-200/t ($14-29/ton) compared to last Friday. Yet, it is reported that purchasing activities has not seen an immediate up-turn; instead, buyers are proceeding with great caution. According to private data, total PP and PE inventories at major local producer’s warehouses have pile up about 14.5% over the past week or 80,000 tons on slower purchasing activities. However, traders are confident that market would be better in the coming weeks.

A market source informed, “Local producers shall stop offering in the next couple of days before announcing January prices, which is expected to be on the stable to firmer trend considered the lack of sales pressure. If futures market continues to move higher in the coming day, that will only affirm market expectation.”

Local PE prices remained mostly unchanged with only LDPE film prices edged CNY50-100/ton ($7-14/ton) lower than last week. Buyers in the northern China area are placing more orders for LLDPE film parcels with a trader informed, “We think more buyers would return to the market in the coming days.”

In the import market, most international suppliers have yet to opened fresh offers and there are only few deals reported on HDPE film and yarn cargoes. While expectation on the market outlook in local ground appears to be rather bullish, players are raising concern that weakening local currency would again discourage buying interest for import cargoes. In spite of that, market participant are not looking at possibility of any drastic reduction in the coming month.

In Southeast Asia, market is rather quiet as most players in Malaysia, Singapore, and Philippines are still on holiday. There are very limited numbers of new offers reported though couple of suppliers are holding very firm stance on their cargoes. Major Saudi Arabia producer adjusted January delivery offers three times last week refused to give additional discount on homo-PP cargoes, maintaining at $1050/ton CIF Vietnam, LC AS term. A distributor offered on behalf of the producer commented, “Our regular customers still accept the price. However, the purchased quantity dropped significantly compared to the bid quantity. We feel that the PP market is really not advancing smoothly and further increment might face stiffer resistance.”

Domestic PP prices in Vietnam remain very firm and opportunities for                                                       further hike remain viable. Players in the country commented that stronger local ground could play an important role in supporting higher import prices, and for this, many are looking at a more sustainable firm trend in the PP sector.

In the PE market, Indonesian players continued reporting about a persistent lack of LLDPE film availability in the local market. Though most buyers in the country are still on holidays, couple of local suppliers have implemented increment in the latest price announcement today. A buyer received IDR500,000/ton ($37/ton) increased on LLDPE film cargoes from one of the domestic producer informed, “Traders are holding back on the cargoes and we think prices might increase again the near term.”

On the other hand, sentiment might continue to weaken this week ahead of the New Year holiday. In fact, many regional players are already away from their desks. However, first half of January appears to be bullish to many traders.