Asia Daily PP and PE Overview 07 Feb 2017

In China, Dalian Commodity Exchange settled slightly lower compared to the previous trading session. PP contract for May delivery slid CNY48/ton ($7/ton) to close at CNY9262/ton ($1151/ton without VAT). Meanwhile, LLDPE futures loss CNY25/ton ($4/ton) to reach CNY10310/ton ($1281/ton without VAT).

There are still little movement in local spot market in the absence of converters, while softer futures trade also create caution among traders. Several converters in Zhejiang area informed about the labour force issues they face after the holidays, from which at the moment they only operate 4-5 machines. A trader informed, “We have 1000 tons of HDPE blow moulding on hand. Though real demand is still not back yet, we are confident about the near term outlook.”

In the PP sector, couple of international suppliers open new offers to the country at mostly stable to firmer levels compared to the pre-holiday period. In fact, major Saudi Arabia maker lifted homo-PP prices by $30/ton to reach $1100/ton CFR China, LC As term. A source close to the company added, “Sales are not good this week, yet we are not seeing much supply in the market. Couple of local traders are complaining about cash flow issues, which hurdle their fresh replenishment activities. We plan to hold firm stance on our cargoes.”

Besides, USA homo-PP continue to emerge in the market in the range of $1040-1060/ton, CFR China, LC 90 days term, which is slightly lower than the current market level. These cargoes, however, are from traders as USA makers are paying more attention to the Western market recently, players said.

Meanwhile, traders are taking advantage of the persistent supply tightness for LDPE film in the country and attempting to increase their offers. Saudi’s LDPE film reaches $1380/ton CFR China today with a seller source said, “Buyers are not very interested in the cargo at the moment since domestic material is about $10-20/ton lower than our offers. Yet, we are not rush to cut prices, and would prefer to monitor buyers’ respond in the coming week before taking any measure to incite sales.”

In Southeast Asia, market is becoming more active with a good number of new offers observed in the region. Players are surprised with the pace of increment in HDPE film offers from international suppliers. In fact, import HDPE film has always kept a large gap with LLDPE film for last five months in 2016 due to comfortable supply and weak demand. However, the situation has changed with a number of plant issues that tightens supply, closing the price gap between the two grades.

A Korean producer implemented price hike of $40/ton on HDPE film and $20/ton on LLDPE film cargoes from last week to reach $1250/ton for both grades, based on CIF Vietnam, LC AS term. A market source commented, “The supplier has very small allocation this month. Besides, the European market is picking up, in which buyers here have accepted HDPE film cargoes at $1200/ton and above, therefore, very less likely that sellers would lower their offers in Asia.” Other regional players also reported seeing very few HDPE film cargoes offered below the $1200/ton threshold this week.   

In another news, Lotte Chemical Titan is still struggling to restart its troubled HDPE lines in Pasir Gudang site after the unit encountered technical issues in mid January. The plant is able to produce 115,000 tons/year of HDPE, mostly film grade. Meanwhile, the company also took its 230,000 tons/year LDPE unit off-stream on 6 February for 20 days maintenance.

The PP market is also gaining speed with deals for Korean homo-PP concluded in Vietnam at $1160/ton, CIF, LC AS term. This cargo is exempted from the 3 per cent import duties, therefore many buyers are requesting for additional quantity. On the other hand, buyers in this market have accepted Middle Eastern homo-PP cargoes at above the $1100/ton threshold with several deals reported at $1120/ton CIF Vietnam, LC AS term. A buyer commented, “We think market still has some room for further increment in the near term, hence we proceeded with purchase of 100 tons parcel.”