Asia Daily PP and PE Overview 24 Jan 2017

In China, futures prices on Dalian Commodity Exchange continue to fluctuate, as May delivery contract lose steam just after a brief gain the previous session. PP futures inched CNY64/ton ($9/ton) lower to settle at CNY9128/ton ($1139/ton without VAT) while LLDPE futures slipped CNY125/ton ($18/ton) to reach CNY10230/ton ($1276/ton without VAT).

There are little movement in local market as most buyers are already away from their desks for holidays. Domestic suppliers informed of no intention to adjust their offers for the remaining of the week and would monitor the state of demand after the holiday before implement any adjustment. “Meanwhile, we are also seeking for opportunity to export PP and PE to Southeast Asia,” a Chinese producer added.

In the import ground, a major Thailand producer lifted PE prices to China by $5-10/ton compared to last week, reaching $1185/ton for HDPE film, $1270/ton for LLDPE film and $1370/ton for LDPE film, all based on CFR China, LC AS term. A distributor said, “Our customers are not around to place bid, therefore we expect more respond only after players return from the holiday. Suppliers are not facing any sales pressure, which might support the current trend throughout the absence of buyers in the market.”

In Southeast Asia, market appears to have been convinced that prices are here to stay on the firming track from which buyers have accepted to purchase import cargoes at higher level. Indeed, shortly after a major Saudi Arabia producer announced February offers to Southeast Asia with $20-30/ton hike on both PP and PE cargoes, deals for homo-PP has formed at only $10/ton discount from initial prices, at $1070/ton CIF Vietnam, LC AS term. A distributor commented, “Due to the persistent plant issues, we have very limited allocation this month. Only converters have accepted the new prices while traders are still reluctant.” Another distributor for this origin added, “We have only 99 tons allocation for homo-PP, hence we plan to hold firm on our price at $1080/ton CIF Vietnam.”

Meanwhile, a major Indian PP maker has returned to the market after nearly two months absence due to plant issues. Latest homo-PP offers from the producer stand at $1090/ton CIF Southeast Asia, LC AS term with a producer source informed, “We are still not having large quantity at the moment as our plants would only restart this weekend. We might have more quantity after the Lunar New Year holidays. Demand in local India is picking up and we plan to allocate more cargoes to domestic buyers.” And for this reason, the supplier reportedly refused to concede to any discount on their cargoes.

In the regional PE market, suppliers are holding firm on their cargoes due to lack of availability and surging upstream costs. Saudi maker lifted LLDPE film prices to Vietnam by $30/ton from last month, reaching $1200/ton CIF term while claiming no allocation to Indonesia. Vietnamese buyers are placing bid for the cargoes at $1180/ton, yet there are still no confirmation from the supplier side.

In local Indonesia, players still see no ease in term of LLDPE film supply and prices are interestingly three digits higher than HDPE film offered in domestic term. A converter in the country commented, “Supply is tightening and even Middle Eastern cargoes are hard to come by this week. This give a very clear signal that prices might sustain the current trend even with slower demand during Lunar New Year.”