Asia Daily PP and PE Overview 05 April 2017

In China, futures prices on Dalian Commodity Exchange made an impressive rebound on the first trading after the Tomb Sweeping Festival. May delivery contract for PP firmed up moderately at CNY163/ton ($24/ton) to reach CNY8311/ton ($1031/ton without VAT). LLDPE contract surged CNY280/ton ($41/ton) to close at CNY9475/ton ($1175/ton without VAT).

Trading activities in local ground is reported to be active with offers for both PP and PE firmed up in the range CNY50-100/ton ($7-14/ton), except LDPE film prices gained up to CNY200/ton ($29/ton) from the pre-holiday period. Buying interest for PE appears to be better than PP after the holiday with a market source explained, “This partially due to stronger LLDPE futures that created better arbitrage opportunity. On the other hand, converters in the agriculture film sector are doing much better than those in the PP segment. We managed to conclude a good number of deals to local buyers today.”

In the import market, a major Indian producer down adjusted their homo-PP offers to China by $10/ton from last week to reach $1025/ton CFR China term. “Import offers move lower despite limited availability from overseas suppliers, which we are very concern. Near term outlook is rather cloudy, however we hope that a series of local plants shutdown and positive outlook in other key import destination would support the sentiment,” a trader in Ningbo said.

In Southeast Asia, market started seeing more movement as buyers take initiative to check on offers, however, many international suppliers have yet to announce new prices. It is reported that a Southeast Asian PP supplier has decided to match the recent price reduction in local Indonesia market, by offering $20-30/ton discount on homo-PP yarn cargoes to conclude deals at $1140/ton CIF Indonesia, LC AS term. “Buyers therefore rush to check on offers from other suppliers to confirm the trend,” a market source informed.

A buyer, who reported to have contacted several other suppliers to make inquiries on new offers said, “Not many ASEAN suppliers are willing to sell below the $1150/ton CIF Indonesia term at the moment, and we might wait for further discount to emerge instead of deciding fresh purchases now. Since demand in other markets within the region shows signs of a pick up, we are not expecting any significant price cut to Indonesia.”

In fact, a major Saudi Arabia produce announced weekly homo-PP offers to Vietnam today at $10/ton increased from last week, reaching $1100/ton CIF term and buyers have accepted the hike. A distributor source offered on behalf of the producer informed that there are only 400 tons of yarn grade available, therefore they are not able to fulfill all inquiries. A local trader added, “Despite firmer offers, prices are still within the buyer acceptance levels. We are unsure if market could firm up further in the near term. Domestic suppliers are holding back on their cargoes, hoping that stronger import ground could support the local trend.”  

In the PE sector, offers observed at relatively stable levels week on week basis and the market might remain on this trend in the near term with expected pick up in demand in line with Ramadan season. However, it appears that traders are still not very convince of the market trend and many prefer to take cautious stance when it come to making fresh replenishment at the current prices. “If compared to local prices, we are making losses by accepting the current import LLDPE film offers. In addition, we are also concern over the market condition during end of May as it is the start of the fasting month and also ChinaPlast event,” a Vietnamese trader commented.

A the meantime, LLDPE film supply in local Indonesia and Malaysia market is expected to be tighten throughout April as both Chandra Asri and PT. Lotte Chemical Titan Nusantara encountered production interruption at their LLDPE lines. Players also reported that Malaysia’s Petronas has switched to produce LLDPE roto molding grade instead of film, causing possible shortage in local Malaysia.