Asia Daily PP and PE Overview 22 Mar 2017

In China, futures prices on Dalian Commodity exchange ended the recovery trend observed over the past one week to settle at loses today. May delivery contract for PP shredded CNY216/ton ($31/ton) to close at CNY8103/ton ($1007/ton without VAT). LLDPE contract meanwhile slipped CNY190/ton ($28/ton) to reach CNY9245/ton ($1149/ton without VAT).

Domestic spot offers for both PP and PE remain largely unchanged from yesterday and traders reported moderate number of deals today while hoping that market could sustain the stable trend for the remaining of the month. A trader sold 1000 tons of homo-PP to local buyers said, “Most cargoes takers are traders this week. We hope market to sustain the current condition into April, which could lead to further reduction in local inventory. However, one thing clear to us is that prices must not firm up significantly if sellers were to attract buying interest.”

It is also reported that demand for LLDPE and LDPE film in Northeast and Northwest area continue to pick up as converters in the agriculture film sector are making replenishment. A buyer purchased local LLDPE film cargoes said, “Despite falling futures market, we think domestic suppliers might not reduced offers too much, therefore we procured some quantity to maintain on hand stock.”

There are little changes in the import market due to the lack of new offers from international suppliers. Except import LDPE film has regained the competitiveness over the local cargoes, others import PP and PE prices are still traded at premium over domestic material. It is the tug of war that overseas suppliers are holding firm their offers claming healthy sales in Western market while local buyers constantly comparing prices with competitive local cargoes.

In Southeast Asia, there are very limited trading activities reported as the week proceed though continued falling upstream costs are having adverse effect on the general sentiment. Buyers across the region prefer to hold cautious stance, as near term outlook remains unclear. Many are hoping to see additional discount to emerge on homo-PP cargoes at the current energy and propylene costs.

An Indonesian buyer received offers for Saudi’s homo-PP yarn at $1100/ton CIF, LC AS term and placed bid at $20/ton lower said, “We are waiting for the supplier to give feedback. Market is softening in a very slow pace and in spite of the upstream market condition and weak demand, suppliers are not showing eager to cut prices to facilitate sales.”

Vietnamese buyers are experiencing similar situation, though with comfortable inventory on hand, many decided to take wait and see stance. “Our Middle Eastern supplier has some homo-PP yarn cargoes at $1080/ton CIF Vietnam, yet refused to offer any discounts. The near term market outlook is becoming very uncertain, yet we might wait for additional discount before procuring some quantity.”

Within the regional PE market, both major producers in Indonesia has reportedly restarted their LLDPE and HDPE lines this week, easing local supply to a certain extent. A number of buyers in the country are showing strong interest for prompt PE cargoes in preparation for the Ramadan season. “Our end products orders are coming in and at the moment we are still sourcing material from local market. Domestic LLDPE supplier has been able to produce full range of product this week, reducing the need to source material from import ground,” a converter commented.

Local PE market in Vietnam meanwhile is softening, as demand remains sluggish. The general sentiment is negative affected since ethylene costs plunged to multi months low and energy market persist the weak trend. Even with import LLDPE film offers breached below the $1200/ton threshold, there is little buying interest showed. A trader offered locally held Saudi’s LLDPE film cargoes at VND29,800,000/ton ($1190/ton without VAT), FD Vietnam, cash term said, “Local demand is so weak at the moment. We think import offers have to go down further in the near term as traders are not making any profit at the current prices. We are not that optimistic about the market prospect in the remaining of this month.”