Asia Daily PP and PE Overview 10 Mar 2017

In China, futures market shows little recovery from the down trend with contract 1705 for both PP and LLDPE continue to decline on the back of falling energy values. PP futures slid CNY124/ton ($18/ton) from the previous day to reach CNY8120/ton ($1004/ton) while LLDPE contract fell CNY140/ton ($20/ton) to close at CNY9115/ton ($1127/ton without VAT).

Trading activities in local spot market appears to be calmer on the final trading day of the week as buyers decided to take a break after procuring much of the needed quantity throughout the week. A trader from Hubei sold coal based homo-PP yarn at CNY8000/ton ($990/ton without VAT), EXW China, cash term said, “We lower our offers by CNY50/ton ($7/ton) and managed to clear out some inventory. Near term outlook is really bearish and local homo-PP prices might breach below the CNY8000/ton threshold in the coming week.”

In the import ground, a number of Chinese producers and traders is exploiting opportunity to export locally produced cargoes to Southeast Asia market, especially coal based homo-PP material. “We received some inquiries from Vietnamese buyers and we are working on the suitable prices to achieve deal. Local market is rather slow and we think Chinese suppliers might have to focus on export for a longer than usual period this time,” a producer commented.

Meanwhile, there are very few offers observed in the import ground which players attributed to the fact that local market is way more competitive than USD cargoes now. “Suppliers are not showing interest in China market recently and we deeply concern about the state of supply in early May with few import cargoes arrival while domestic suppliers are putting all effort to export local inventories,” a buyer commented.   

In Southeast Asia, the general sentiment remains weak with buyers are conservative about making fresh purchases. However, import homo-PP priced below the $1100/ton threshold appears to gain better attention in Vietnam. A trader is currently collecting bids for Chinese homo-PP in Vietnam market commented, “Most buy idea stand around $1080/ton CIF term for coal based material. We are not able to match the bid prices at the moment, as we are still able to achieve sales in local China market. On the other hand, we do hope to export some quantity, therefore we plan to discuss with Vietnamese buyers to meet the common term.”

A Chinese producer reported to have concluded 1000 tons of coal based homo-PP to Vietnam at the level $1080/ton FOB China, LC AS term (equivalent to $1090-1100/ton CFR Vietnam); however, this deal has not been verified by buyers at the time this report is published.

It is interesting that there are very limited numbers of homo-PP offers toward the end of the week from other international suppliers besides Chinese origins. A regional buyer commented, “Chinese origin material has been dominance in Southeast Asia this week, which clearly depict the local supply-demand dynamic in this market. We do expect a little more discount to emerge in the coming week, and we plan to wait before taking position.”

In the regional PE market, ethylene cost based on CFR Northeast Asia term plunged $85/ton on Thursday and it might continue to soften in the coming days amid weak downstream market, players said. However, there is little movement in PE offers after a Saudi Arabia producer slashed HDPE and LLDPE film price to Vietnam in the previous trading day.

A buyer received offers from another Saudi Arabia producer at $1210/ton for HDPE film and $1260/ton for LLDPE film, CIF Indonesia, LC AS term said, “We placed bid at $1220/ton for LLDPE film but our supplier refused to accept, claiming limited cargoes.” Similar feedbacks are reported in Vietnam for the same cargoes. “It appear that Middle Eastern producers are not facing any sales pressure, yet, if ethylene costs continue to go down amid persistent weak demand in China, it is very likely that discounts would become available,” a market source commented.