Asia Daily PP and PE Overview 31 March 2017

In China, futures market concluded the volatile trading week on soft note. May delivery contract for PP slipped CNY140/ton ($20/ton) from the previous day to close at CNY8047/ton ($997/ton without VAT). LLDPE contract also loss CNY105/ton ($15/ton) to close at CNY9140/ton ($1132/ton without VAT).

Domestic market is entering holiday mood with very limited transaction reported on the last trading day of the week. Only large-scale converters return to the market to replenish needed quantity before leaving for Tomb Sweeping Festival, market sources reported. “We are maintaining offers for both PP and PE, however, purchasing interest seems dropped. Converters are not getting sufficient end product orders, from which April might see no strong rebound,” a trader said.

In the import market, traders continue to down adjust their homo-PP offers to China from yesterday with several deals for Saudi Arabia and USA origin cargoes at $1010-1020/ton CFR China, LC AS term. However, it is reported that most cargoes available are injection grades and homo-PP yarn seems very limited in the open market at the moment.A buyer purchased Saudi Arabia homo-PP injection at $‎1010-1020/ton CFR China, LC AS term said, “We have been searching through several bonded warehouses in Ningbo, however, there is no homo-PP yarn cargoes available. There is no impact on the market at the moment as domestic availability is still comfortable, yet it could be an issue in the medium term.” Chinese players expected that import homo-PP to the country might touch the $1000/ton mark in the near term, but excluded the yarn grade given the tight availability.

In Southeast Asia, buying interest for import homo-PP among Vietnamese converters appears to be better than in other markets within the region. Buyers here believed that room for further reduction is getting narrower which encourages replenishment activities. “Besides stronger energy market that normally boost market confidence, many converters are running low on inventory, therefore restocking become necessary this week and next week,” a regional supplier explained. Similar to the situation in China, Vietnamese buyers are also seeing limited homo-PP yarn offers from Middle Eastern sellers, “This however impact little on the current market balance since other origins cargoes are still arriving. The medium term market outlook yet, might be tightened a little,” a converter purchased South Korean homo-PP at $1110/ton CIF Vietnam said.

In contrast, Indonesian buyers who were initially planning for replenishment decided to withdraw to the side-line after international suppliers slashed offers to the country. Prices for both dutiable and non-dutiable cargoes slipped on the final trading day of the week. A buyer received Australian homo-PP offer at $1130/ton CIF Indonesia, LC AS term said, “We are taking cautious stance at the moment as offers for duty free cargoes fell too quickly this week. We think the softening trend might persist in the coming week, hence we prefer to take wait and see stance.”

The regional PE market remains largely unchanged and suppliers are becoming firmer on their available cargoes. Local Vietnam market, in contrast continues to see price reduction as traders attempting to speed up sales process regardless of the stabilising import ground.

In related plant status news, Indonesia’s Chandra Asri Petrochemical has once again been forced to shutdown its LLDPE unit in Cilegon last weekend on electricity supply issues. Restart schedule remain unconfirmed. A source close to the company informed, “The impact of electricity supply on the plant could be more severe than other problem and the plant might take slightly longer to come back. We therefore will not be able to fulfil any contract or spot orders in the next couple of weeks.”