Asia Daily PP and PE Overview 29 March 2017

In China, futures market rebounded from the previous softening two sessions with both contracts settled at three digits higher. May delivery contract for PP jumped CNY276/ton ($40/ton) to reach CNY8237/ton ($1022/ton without VAT). LLDPE contract has also added CNY125/ton (26/ton) to close at CNY9305/ton ($1154/ton without VAT).

Suppliers attempted to implement CNY50-100/ton ($7-14/ton) hike on both PP and PE cargoes with the support from futures market; however, most deals are concluded at unchanged levels from the previous trading days. Purchasing activities in local China market remain relatively stable and unlikely to spike for the remaining of the week before the Tomb Sweeping Festival, players said.

A trader in Shanghai said, “We managed to conclude a good number of deal today at stable prices. Buyers are very price sensitive at the moment and effort to increase offer might not be successful. Many converters are still operating at lower than expected rate, hence demand might only hold stable in the near term.” There is a possibility that total PP and PE inventories at local producers’ warehouses might accumulated again throughout the long weekend holiday, from which sellers are monitoring very closely market movement this week.

In the import market, it is reported that traders have reduced offers for Indian homo-PP by another $15/ton compared to earlier this week to reach $1020/ton CFR China, LC 30 days term. “Traders are cutting into their own profit to stimulate buying interest. We are not seeing the need to reduce prices any further given limited offers from international suppliers at the moment, hence we maintain our offers unchanged,” a trader from Zhejiang said.

Import PE from Iran to the country might be tighten further in the coming month as there has been report that the recent tsunami has damaged several loading facilities in Assaluyeh, Iran, which might lead to delay in April shipment. PE parcels from at least three major Iranian producers are affected by the cause, trader said. “In addition, the recent change in payment term for Iranian cargoes might affect medium term availability in China,” a trader added.

In Southeast Asia, there are more activities in the market as the week proceed and as reported earlier, a number of regional converters are coming back to make replenishment for homo-PP. Though most of the deals reported at are still in small quantity, it shows that demand is returning.

An international trader offered Saudi Arabia homo-PP at $1090/ton CIF Vietnam, LC AS term said, “Several of regular buyers have contacted us today to make purchases at the mention prices and we managed to sell out the available quantity. Buyers started to seek for material as there has not been many offers from overseas suppliers during these two weeks. We hope market could continue to improve in the near term.”

Meanwhile, in Indonesia, Southeast Asian suppliers are cutting offers as pressure from local market build up. In fact, it is reported that domestic traders are offering locally held Thailand and Vietnamese homo-PP below the $1200/ton threshold, at $1190/ton FD Indonesia, 15 days payment term. Import offers for non-dutiable cargoes therefore witness a drop of $20-30/ton week on week basis. A buyer commented, “We remain conservative about making fresh replenishment even with the reduction. Our end product business has yet to see significant pick up, however, we do hope the orders to come in the coming week as preparation for Ramadan season.”

Even in the PE sector, trading activities in Vietnam appear to be better than in Indonesia as import LLDPE and HDPE film at the range $1160-1170/ton CIF term has attracted some buying interest. Buyers in the country, however, concern if this trend would sustain or improve in the near term since local prices started falling in a faster pace, and becoming more competitive than import’s at the moment. A buyer purchased Saudi LLDPE film at VND29,400,000/ton ($1173/ton without VAT), FD Vietnam, cash term said, “The near term outlook is getting cloudy and we think there must be a correction to bring market back to normal. We hope local market could regain momentum as supply is being digested.”