Asia Daily PP and PE Overview 30 March 2017

In China, futures prices on Dalian Commodity Exchange again loss its momentum with May delivery contract for LLDPE fell CNY115/ton ($17/ton), eradicating most of the gains in the previous session to reach CNY9180/ton ($1139/ton without VAT). PP futures meanwhile remain largely stable, slipped only $2/ton ($0.3/ton) to reach CNY8124/ton ($1008/ton without VAT).

Players in the domestic spot market are entering the holiday mood with the number of deals concluded are faltering in spite of the discount available on both PP and PE cargoes. “Domestic producers, however, are no longer facing strong inventories pressure after nearly three week of satisfactory replenishment activities. We are waiting for April offers before undertaking any measures to smoothen sales,” a trader in Ningbo said.

In related plant status news, a fire broke out at Nanjing Yangzi Petrochemical plant late this evening, causing emergency shutdown at its 230,000 tons/year full density PE line, 3 HDPE lines with total capacity of 270,000 tons/year and also the 70,000 tons/year PP1 line. Detail on the operation status of the upstream ethylene and propylene plant would be updated later.

In the import market, import homo-PP from Middle East to the country continue to journey lower, reaching $1020/ton for various cargoes, which indicated some $20-30/ton reduction week on week basis. A trader informed, “Most of these parcels are homo-PP injection grades and yarn cargoes are very limited. International suppliers are facing pressure from competitive local material and the situation might worsen if demand in other major importing market does not pick up.”

In Southeast Asia, market remains very much in the same situation and it appears that buying interest among Vietnamese buyers is comparatively better than in Indonesia. In fact, after major Southeast Asian suppliers slashed homo-PP offers to Indonesia, bringing the latest range for non-dutiable origin to $1150-1170/ton CIF Indonesia, LC AS term, buyers here are still reluctant to make purchases. A converter placed bid at $1140/ton for Vietnamese material said, “If our supplier agree to our buy idea level, it would make Southeast Asian cargoes much more competitive than Middle Eastern material. We feel that prices are low enough and might need to make larger purchases this time.”

Meanwhile, in Vietnam, converters have accepted dutiable cargoes at the range $1090-1100/ton CIF Vietnam, LC AS term with an international sold 500 tons of Indian homo-PP at $1100/ton said, “Most buyers are converters, local traders are not confident enough to make purchases at the moment, especially when propylene costs continued to weaken. There are some forward selling offers in the market for the same origin at $30/ton lower, however the shipment would only arrive in July.” Another major Saudi Arabia has also announced fresh offers to Vietnam at $1090/ton CIF, LC AS term, a reduction of $30/ton compared to mid of the month. Buyers are attempting to place bid for $20-30/ton lower on deal, however, the supplier has yet to give any feedback.

In the regional PE market, most international suppliers have concluded business for April delivery and there is a widespread expectation that market would remain on the stable track in the near term as upstream costs are stabilising amid tightening supply. “There is a number of cracker maintenance shutdown which might support ethylene prices in the region. Therefore, we believed that the PE market would be more stable in the coming week,” a regional market source commented.

At the meantime, a major local producer in Malaysia has announced April delivery offers to domestic buyers with MYR200-230/ton ($45-52/ton) reduction for HDPE and LDPE cargoes, following the international trend. Malaysian buyers have not immediately responded to the new offers with many decided to take wait and see stance.