Asia Daily PP and PE Overview 03 Feb 2017

In China, Dalian Commodity Exchange re-opens after the long holiday on soft note with May delivery contract for both PP and LLDPE inched CNY60-67/ton ($9-10/ton) lower to reach CNY9252/ton ($1151/ton without VAT) and CNY10240/ton ($1273/ton without VAT) respectively.

There are very limited movement in both local and import ground since many players are still away from their desks. It is expected that converters might only come back after the Chap Goh Mei celebration on 11 February, which means the current sentiment could remain in place till then. According to private data, total PP and PE inventories at major domestic producers’ warehouses have accumulated to about 930,000 tons throughout the holiday week, yet it is still about 5 per cent below the same period last year. A trader said, “We think the pressure is not very strong and therefore, suppliers might attempt to hold firm stance on their cargoes.”  

Meanwhile, there are only few import offers available today at firmer levels compared to the pre-holiday period. In fact, Qatar’s LLDPE film offered at $1205-1215/ton CFR China, TT in advance term, some $20-30/ton higher than last month. A trader commented, “Buyers are not around at the moment, however, with the current trend observed in Southeast Asia and the monomers market, we think that chances for prices to go softer is very thin. Market direction shall be clearer in the coming week.”  

In Southeast Asia, trading activities in countries that celebrated Lunar New Year has yet to come back fully though players across the region are generally looking at a solid firming trend. More overseas suppliers start giving new offers, mostly at higher levels compared to the pre-holiday period and buyers appear to be less aggressive in placing low bid.

Another Saudi Arabia producer lifted homo-PP prices to Indonesia by $30-40/ton compared to last month to reach $1100/ton CIF, LC AS term. A converter place bid for the cargoes at $1090/ton, a $10/ton lower than initial offer commented, “Our supplier also has very small quantity this time and too much pressure on prices might discourage deal. It appears that sellers might attempt to increase offer again in the near term given the lack of cargoes.”

On the other hand, woven bags makers in the country are complaining about the persistent weak end product businesses while new tenders for governmental projects for January and February have already completed. A buyer obtained $25/ton discount on Saudi’s homo-PP to conclude deal at $1085/ton CIF Indonesia said; “There are no cargoes below the $1080/ton mark at the moment. We are forced to make replenishment though our end product business is slow. Market is moving upward direction quicker than our expectation.”

Meanwhile, there is little movement in domestic Vietnam and Philippines markets as traders decided to take the side-line to monitor further development in the import ground before setting new local offers. However, Saudi producer has lifted PE offers by $20-30/ton from last month to reach $1220/ton for LLDPE film, $1190/ton for HDPE film and $1380/ton for LDPE film, all based on CIF Vietnam, LC AS term. A buyer informed, “Our supplier has only 50 per cent of regular allocation this time and willing to hold back the cargoes if buyers are unable to accept the hike. Domestic market is still slow, as players have not fully returned yet. We have large quantity of USA’s LLDPE film to arrive within this month, and we prefer to sell slowly and limit replenishment.”

Regional players are commenting that PE market might face limitation when it comes to significant hike despite limited availability from international suppliers and firming upstream cost. Explain to this perspective, traders are pointing to comfortable supply level in domestic market, especially in Indonesia and sluggish buying interest in Vietnam. However, stronger import ground is fueling hope that domestic markets would pick up in the coming week.