Asia Daily PP and PE Overview 20 April 2017

In China, futures prices on Dalian Commodity Exchange made the first rebound in seven sessions though the increment range is still humble. September delivery contract for PP gained CNY81/ton ($12/ton) to reach CNY 7729/ton ($959/ton without VAT) while LLDPE contract added CNY70/ton ($10/ton) at CNY8830/ton ($1095/ton without VAT).

Trading activities in local spot market is reported to be better after traders conceded to another CNY100/ton ($14/ton) discount on both PP and PE cargoes. A converter purchased regular homo-PP yarn at CNY7700/ton ($955/ton without VAT), EXW China term said, “We are just uncertain if prices have reached the bottom after a long period of soft demand. We decided to make some purchases as we think this price is competitive. Demand for our end product has yet to improve recently.”

Another trader reported to have sold few hundred tons of homo-PP added “Several of our regular customers come back to make purchases today. We are still having a number of previously purchased cargoes at higher costs, and if local market improve in the near term, we plan to deplete the inventory to secure cash flow.”

There is little movement in the import market though import homo-PP below the $1000/ton threshold did not repeat in the market. A trader reported to have 400 tons of USA homo-PP yarn at bonded warehouse, offering at $1020/ton said, “We are open to negotiation with serious buyers. Domestic material is very competitive at the moment; hence our customers are very aggressive in placing lower buy ideas. We only managed to sell a small quantity today.”

In Southeast Asia, the general sentiment sees little changes while couple of international and regional suppliers announced fresh homo-PP offers at stable to softer levels. Major Saudi Arabia maker rollover homo-PP prices to Vietnam from earlier this month at $1100/ton CIF Vietnam, LC AS term. Several deals are reported at $10-20/ton discount. A trader said, “The supplier refused our bid at $1070/ton claiming limited availability. This cargo might only arrive the market in July, while the medium term outlook is rather cloudy. Hence, we only make a small purchases.” Buyers in the country are also actively placing bid for Chinese coal based homo-PP yarn at $1060/ton CIF Vietnam term and currently awaiting supplier feedback.

Meanwhile, in Indonesia, Singaporean producer reappear in the market with competitive homo-PP yarn offers at $1130/ton CIF Indonesia, LC AS term. A converter purchased 300 tons of the cargoes at $10/ton discount from initial offer said, “Other Southeast Asian producers are still very firm on their cargoes at the moment, though pressure is building up. Even domestic suppliers have suspended the special pricing scheme; most buyers have replenished much of needed quantity for May. Therefore, we believed that import offers at the upper end of the overall price range would have to catch up wit the softening trend.”

In related plant status news, Singapore’s TPC has shut two out of its five PP lines on feedstock disruption. The two lines with combined capacity of 160,000 tons/year mainly produce homo-PP grade. Meanwhile, Saudi’s NATPET has restarted the 400,000 tons/year PP line as the company completed 3 week maintenance work.

In contrast, PE suppliers hold firmer stance on their cargoes with primary support centring the recent gain in the upstream ethylene market. Demand wise, regional buyers remain reluctant toward the current import offer levels. A Thailand producer opened offers at $1185/ton for HDPE blow moulding and $1195/ton for HDPE yarn based on CIF Vietnam, LC AS term with a source close to the company said, “We have not been able to conclude any deal. Most buyers are requesting for at least $30/ton discount, which we are unable to fulfil.” Several other traders have shared similar experience after offering Middle Eastern and Korean HDPE and LLDE film in the range $1160-1170/ton CIF Vietnam, LC AS term.

Situation within domestic market is better off in Malaysia and Vietnam. As reported earlier, the lack of HDPE film availability has encouraged more demand for this grade in local Vietnam market in recent weeks; however, buying interest is limited to only few Middle Eastern origin cargoes. Meanwhile, in Malaysia, production issues have generated moderate to severe supply tightness with a local producer said, “We are carrying backlog up to one month now. One of our crackers is still down and therefore, couple of our PP and HDPE lines might only be able to restart later. This month we might pay more attention to local ground since export market seems not very attractive.”