Asia PP and PE Daily Overview 11 Jan 2017

In China, futures prices continue to move higher as the week proceeds despite the range is rather limited. May delivery contract for PP increased CNY43/ton ($6/ton) from the previous session to reach CNY8590/ton ($1061/ton without VAT). Meanwhile, LLDPE futures gained CNY70/ton ($10/ton) to close at CNY9815/ton ($1212/ton without VAT).

Purchasing activities in local ground is diminishing as buyers are entering the holiday mood. Yet, spot offers for both PP and PE hold largely stable compared to yesterday thanks to stronger futures trade. A coal-based producer in Inner Mongolia said, “We managed to conclude some deals today, however, sentiment might continue to weaken in the coming week. Couple of our delivery contractors have stopped taking new orders and therefore arranging trucks in the near term might become very difficult.”

In the import ground, prices are seeing little changes compared to the earlier session and so the purchasing interest. Many traders decided to offer in local term instead of USD term as the exchange rate is hurting buying appetite. A Zhejiang based trader informed, “We are offering Iranian HDPE cargoes at $1160/ton for film and $1120-1125/ton for blow molding grade, based on CFR China term and no single cargoes are sold today. Meanwhile, we still can move material in local ground. Our manufacturing customers are not showing interest in import cargoes regardless of the shipping time while traders are actively bidding for large discount.”

Buyers are pointing to the fact that domestic materials are traded at much competitive levels. “Import homo-PP offered at $1040-1050/ton CFR China is about CNY300/ton ($43/ton) higher than domestic cargoes at the moment, leave alone prices above the $1050/ton threshold. There are too much uncertainties involved in the post holiday outlook especially with the current international political ground. We prefer to hold conservative stance,” a market source added.  

In Southeast Asia, market becomes more active with a number of suppliers return to open new homo-PP offers to the region after couple of weeks absence. It appears that most offers given stand at firmer levels, however buyers are showing strong resistance pointing to falling energy market and lackluster demand condition in China. As a result, deals are mostly reported at discount.

A major Saudi Arabia producer lifted homo-PP prices to Vietnam by $20/ton from last month to reach $1070/ton CIF, LC AS term, yet several purchases are reported at $1045-1050/ton, which is stable from last month. A market source informed, “Our supplier is not having large allocation, yet we are not planning to make purchases. The cargoes take a little too long to arrive which involved too high risk.” The source also reported to have received offers for non-dutiable Korean homo-PP cargoes at $1080/ton CIF Vietnam, some $20/ton lower than last week, which might indicate the narrow upper limit market has to advance further.

There are five major PP plants are up for maintenance shutdown during the first quarter this year and players are expecting supply to be curtailed to a certain extend. This has fostered hope for continuous firming trend in the coming weeks.

Meanwhile, it also appears that import LLDPE film prices to the region at the $1200/ton threshold and above are not gaining any buying attention from buyers. This explained to why several traders are prompter to reduce their offers with hope to speed up sales process before the holidays. A trader offered Middle Eastern LLDPE film at $1180/ton CIF Vietnam, LC AS term said, “We cut our offers by $20/ton from last week as demand is weak. Domestic ground might still need more time to digest the current supply. We think the momentum is not there to push prices higher.”

In related plant status news, market players reported emergency shutdown at a major Qatari PE plant due to an unspecified technical issues. The plant produces 500,000 tons/year of HDPE and 700,000 tons/year of LDPE. It is still unsure on the restart schedule at the moment. The maker initially planned an annual turnaround in March.