Asia Daily PP and PE Overview 14 Mar 2017

In China, futures market is regaining some balance though the recovery pace is still slow. May delivery contract for PP gained CNY46/ton ($7/ton) to reach CNY8140/ton ($1005/ton without VAT). LLDPE contract meanwhile increased CNY85/ton ($12/ton) to close at CNY9195/ton ($1136/ton without VAT).

Domestic spot market is gradually stabilising and traders reported to have concluded better number of deals for PP, HDPE and LLDPE even with CNY50-100/ton ($7-14/ton) hike from yesterday. Demand for LDPE film meanwhile remains weak. A trader from Chengdu reported to sell off 500 tons of homo-PP to local buyers today said, “Some converters are coming back to replenish small quantity. We think market is nearing the bottom and might continue to improve in the near term.” Another trader added, “A number of converters are asking us to maintain old price on deals, which indicates the potential for demand to pick up in the near term. We believed that buyers are mostly not having high stock on hand and might need to accept higher prices to cover production need.”

In the import market, PE offers at the upper end of the overall price range are facing stiff resistance and market continues to see adjustment on these cargoes. A major Thailand maker cut prices by $20/ton for LDPE film to $1280/ton and $15/ton for HDPE film to $1165/ton, CFR China, LC AS term. A trader commented, “We think that import market could only revive if local ground improve further. We have some cargoes to re-export to Southeast Asia market, however, it seems the location gap is not attractive enough.”

Direct homo-PP offers from Middle Eastern producers are still hovering in the range $1120-1130/ton CFR China term. Buying interest for these cargoes is very limited and yet suppliers are holding very firm stance at the moment.

In Southeast Asia, market has not seen any major changes compared to the previous trading day, though it does appear that Indonesian buyers are more active in placing bids for the desired cargoes.

Couple of deals for Southeast Asian homo-PP yarn are reported at the level $1170/ton CIF Indonesia, LC AS term with a buyer commented, “Our supplier agreed to our buy idea level after a hard negotiation. Vietnam supplier maintains very firm stance on their cargoes at $1200/ton with the same term, however, this is too high compared to local cargoes.” In fact, players in the country informed of the competitive material domestic traders offered on the back of weak buying interest. Depending on the quantity and payment term, buyers are able to obtain prices at the range $1235-1250/ton excluding VAT, FD Indonesia in the distribution market.

Meanwhile, market condition in Vietnam remains sluggish as buyers hold to the expectation that prices might see addition discount in the near term considering the current availability and upstream values. Couple of traders therefore have slashed their offers to the country to smoothen sales process. A Chinese trader lowered re-export USA’s homo-PP injection prices by $10-20/ton from yesterday to reach $1080-1090/ton CFR Vietnam, LC AS term. The source added, “We are still having some quantity on hand and hope to deplete the inventory with the discount.” Vietnamese players also reported receiving Chinese regular homo-PP yarn at $1110/ton CIF, LC AS term with form E; yet many buyers are not showing strong interest claiming sufficient stock and hoping to obtain further discount.

The regional PE market is once again moving in diverged direction though it seems that more suppliers are loosing confident in the near term outlook. A trader lowered offers for Middle Eastern PE by $20/ton week on week basis to reach $1180/ton for HDPE film and $1200/ton for LLDE film, CIF Vietnam, LC AS term. The source commented, “The whole regional market is affected by slow demand condition in China. Fortunately, most Saudi Arabia producers are paying more attention to European market, reducing the pressure in Asia region. Our regular customers are not showing much interest even with the price adjustment.” In contrast, other trader is attempting to increase offers for Taiwanese HDPE and LLDPE film by $5-10/ton compared to yesterday, creating a strong wave of resistance among buyers.