Asia Daily PP and PE Overview 11 April 2017

In China, futures prices on Dalian Commodity exchange continue to move lower, shredding up to three digits as the week proceed. September delivery contract for PP loss CNY151/ton ($22/ton) to reach CNY7996/ton ($990/ton without VAT). LLDPE contract decreased CNY135/ton ($20/ton) to close at CNY9160/ton ($1135/ton without VAT).

Trading activities in local ground remain weak today, yet suppliers only agreed to CNY50/ton discount on both PP and PE cargoes. It does appear that domestic LDPE film has reached the peak and might just follow the stable trend in the near term, players said. “We also think that the strong demand for LLDPE film observed in the previous weeks might also falter in the near term, as many converters in the agricultural film sectors are cutting operating rate after the peak season,” a trader commented. Yet, many believed that prices might not reduce in large range given the lack of sales pressure and firming upstream costs.

In the import market, market players reported better purchasing interest for HDPE yarn than other grades as supply is tightened after India’ Haldia encountered unexpected technical issues that caused reduced availability.  Several deals for Taiwanese HDPE yarn are reported at $1185/ton CFR China, LC 90 days term. “We are planning to open new offers for HDPE yarn to China at $1200/ton term, however, at the moment monitoring further movement before announcing fresh prices in the coming week,” a Southeast Asian producer reported.

In Southeast Asia, it appears that most international suppliers are taking wait and see stance as stronger energy market boosted the general sentiment within the region. There are very few offers from Middle Eastern suppliers, mostly at firmer levels from last week. However, recovering Southeast Asian PP market has also attracted export and re-export cargoes from China market again.

In fact, Vietnamese buyers reported receiving Russian homo-PP at $1090/ton CIF Vietnam, LC AS term, re-export from China today. A buyer commented, “Both local and import ground in Vietnam are warming up now and we think very likely that international suppliers would maintain firm stance on their cargoes. We are concern that export and re-export cargoes from China therefore would flow again to Vietnam in larger volume in the near term.” There might be re-export material from China show up again in Southeast Asia market if the margins are attractive; however, the quantity might be small as import arrival to China might be smaller this month given slack replenishment activities since Lunar New Year. There are also several coal based homo-PP offered at the similar levels to Vietnam, however for late June delivery, which does not so attractive to buyers.

Meanwhile, a major Indian producer lifted homo-PP offers earlier this week to $1120/ton CIF Southeast Asia, LC AS term informed that they have not been able to conclude any deal at the new offers. Source close to the producer said, “We are monitoring further development in the market while maintaining firm stance on out cargoes. We do expect other suppliers to follow the trend though propylene costs has softened slightly.”

The regional PE market is rather quiet and though there has been strong expectation among players that prices might remain on the stable to firmer trend in the coming weeks, a major Thailand producer surprised the market by implementing $30/ton week on week reduction on HDPE and LDPE cargoes to Vietnam today. Latest offers stand at $1170/ton for HDPE film and yarn grade and at $1340/ton for LDPE film, all based on CIF Vietnam, LC AS term. A buyer said, “We are requesting for another $40/ton discount on deals for LDPE film. On HDPE, the new prices are a bit below market levels for Asia material and we are discussing with the supplier to make some purchases.”

In related plant status news, Malaysia’s Lotte Chemical Titan unexpectedly shutdown both of its crackers in Southern state of Malaysia today due to water supply issues. The units might need up to 5 days to resume operation. Based in Pasir Gudang, Malaysia, both of the crackers are able to produce 1.08 million tons/year of ethylene and 410,000 tons/year of propylene.