Asia Daily PP and PE Overview 28 April 2017

In China, futures prices on Dalian Commodity Exchange concluded the week on a strong note. September delivery contract for PP added another CNY120/ton ($17/ton) to reach CNY7849/ton ($973/ton without VAT). LLDPE contract hike CNY225/ton ($33/ton) after a humble gain in the previous session, to reach CNY8880/ton ($1100/ton without VAT).

Sentiment in domestic spot market continues to improve and sellers implemented another CNY50-100/ton ($7-14/ton) increased on both spot PP and PE cargoes. Despite entering the Labour Holiday, Chinese players are generally more positive about the market outlook in early May with reduced inventory pressure play the primary supporting role. “Domestic producers have achieved sales target for this month and we think this would support the market trend after the holiday. However, converters are not very active in making replenishment, but rather traders.”

According the Chinese Custom data, China exported about 39,600 tons of PP in March, which is about 63% increased from February. For April, it is estimated that export quantity might be higher. At the meantime, import PE to China in March increased 11% month on month to reach 1,123,249 tons while import PP to China drop slightly to 498,156 tons.

In Southeast Asia, market does not witness any drastic movement ahead of the long weekend holiday. Players have mostly concluded business for PE after obtain some discounts from the initial offers levels while wait and see stance remains the prominent issues in the PP sector.

A distributor reported to have sold out Saudi Arabia HDPE film at $1150/ton CIF Vietnam, LC AS term said, “Our principal supplier has down adjusted LLDPE film prices by another $10/ton from yesterday, reaching $1150/ton with the same term. We only have a small quantity of LLDPE film remaining at the moment and shall complete selling after the holiday.” Several other converter sources also reported to have made sufficient purchases though remain cautious about the near term market outlook, pointing to continue improving supply condition from Middle Eastern suppliers.

Within Malaysia, manufacturers in the PE packaging sector are seeing better number of end product orders due to the preparation for Ramadan season. “Besides, our customers become more willing to place new order after raw material prices went lower. We hope this condition to persist in the coming month,” a shopping bag maker reported. A number of Malaysian buyers are bringing up the concern that trading activities might slow down toward the end of the year as a precaution ahead of the general election.

The regional PP market continue to received revised offers or fresh offers from overseas suppliers at slightly lower levels. Comparing the buying behavior among buyers across the region, Vietnamese buyers are more active, making small purchases gradually while Indonesian buyers are pressing for maximum discount in the presence of competitive local material.

A Saudi Arabia producer reduced weekly offers for homo-PP to Vietnam by $10/ton to reach $1090/ton, CIF Vietnam, LC AS term. Deals for this cargo are reported at $1070/ton for yarn and $1060/ton for injection grade with the same term. “Due to a series of plant issues in quarter 1, we think most Middle Eastern suppliers are not facing as high inventories pressure as previous year. Prices might continue to soften in the near term, yet we believed that the range might not be too large. We have requested for another 100 tons of yarn grade and the supplier is unable to fulfill.”