Asia Daily PP and PE Overview 27 Dec 2016

In China, futures prices increase impressively as the week proceeds. May delivery contract for PP jumped CNY319/ton ($46/ton) to close at CNY9175/ton ($1128/ton without VAT). Meanwhile, LLDPE contract leaped CNY325/ton ($47/ton) from previous session to settle at CNY10190/ton ($1253/ton without VAT).

Domestic spot offers for both PP and PE firmed up for the first time in a week, adding CNY100/ton ($14/ton) while there are reports on a significant up-tick in demand. Players considered this as a start of pre-Lunar New Year purchases, which might last for the next couple of weeks. A coal based PP producer in Shaanxi said, “We managed to sell out more than 1000 tons in the morning session even with the increases. However, we decided to hold back our cargoes as it seems the trend has just only begun.”

Deals for import homo-PP to the country are also seeing improvement though mostly at below the $1050/ton threshold. A buyer purchased Saudi’s homo-PP at $1030/ton and USA’s cargoes at $1020-1030/ton CFR China, LC 90 days term said, “We could not accept any prices above the $1050/ton mark as this would make the cargoes more expensive than domestic spot and futures prices. Despite the fact that domestic market still has prospect for further increases; yet we are just not confident about any possible large hike.”

Players in Northern China area continue to report healthy demand for LLDPE film from agriculture film sector, while in the import market, several traders are attempting to increase HDPE film prices to $1200/ton and above. However, this is only subjected to ready or prompt cargoes. Earlier this week, major Thailand maker slashed HDPE film offers to the country by $5-10/ton compared to last week; however, traders are offering $30/ton higher than producer’s price list to reach $1200/ton CFR China, LC AS term. The source informed, “We could not conclude deals at this price level, however we are not in rush to make any reduction due to limited quantity we have on hand. If futures market continue to firm up, we believed buyers would accept to buy at slight discount.”

In Southeast Asia, there are very limited numbers of new offers from international suppliers while buyers are entering holiday mood. Only couple of makers have opened fresh prices to the region with increases from last week. A major Thai maker indeed lifted homo-PP prices to Indonesia by $10/ton in the latest weekly price announcement, reaching $1230/ton CIF Indonesia, LC AS term. A buyer in the country commented, “This offer is way higher than local offers and we are not positive on the prospect of the deals at such levels. Domestic market is slowing down as buyers are leaving for the upcoming holiday.”

Meanwhile, other international producers are planning to only re-open new offers after New Year and very likely that price trend would remain on the stable to firm track considering the demand condition in China. An Indian PP producer said, “We are out of the market and might remain on the side-line in the next two to three weeks. At the moment, we are not having sufficient inventories to offer due to a delay in plant start up after scheduled turnaround.”

Meanwhile, the LLDPE film supply tightness in Indonesia might be worsening in the coming days, as it is uncertain on when local maker could stabilise its production. Many traders in the country claimed running out of allocation and started looking for prompt cargoes from import market, though non-dutiable origins are highly preferred. This has pushed domestic offers up over the past few days, yet converters appear to be still reluctant to accept the new prices. A buyer received local LLDPE film offers at IDR17,600,000/ton ($1310/ton) FD Indonesia, cash term said, “We are still carrying sufficient stock for January and we think purchasing February inventory at such high level is too risky. We hope local producer could restart production soon, which might ease the current market condition.”

On the other hand, while local demand for HDPE film in Vietnam witness improvement, buying interest for import cargoes remains weak. A Saudi Arabia producer claimed sold out January delivery cargoes to Vietnam, except HDPE film, which is priced at $1150/ton CIF Vietnam, LC AS term. A distributor commented, “Our customers are not showing much interest pointing to the uncertainties after Lunar New Year. We have not been able to conclude any deals for HDPE film cargoes at this price.”     ?