Asia Daily PP and PE Overview 04 May 2017

In China, futures prices on Dalian Commodity Exchange surprisingly dived three digits towards the end of the week. September delivery contract for PP dip CNY212/ton ($31/ton) to settle at CNY7592/ton ($942/ton without VAT). LLDPE contract slid CNY110/ton ($16/ton) to reach CNY8755/ton ($1086/ton without VAT).

Domestic spot market portrays the same theme and buyers continue sourcing cargoes at the lower end of the overall price range. A woven bags converter in Zhejiang purchased 250 tons of local material at CNY7800/t ($968/ton without VAT) said, “Demand for our end product is not very strong in recent months, however with low raw material prices, our customers are more willing to place orders now. We are watching out for additional discount and might need to source another 1000 tons in the coming weeks.”

In the import market, Saudi’s HDPE blow moulding is also matching competitive USA cargoes to go lower with a good number of deals are reported at $1020/ton CFR China, LC AS term, June shipment. A buyer said, “We have purchased both cargoes from USA and Saudi supplier at similar levels. The allocation at these prices are not high and many other buyers are also showing interest.”

Import homo-PP to China is not falling further. “Many Middle Eastern suppliers are not interested in opening new offers to China amid better demand in other global markets. Only traders are offering on hand cargoes. We have not seen many offers for mainstream yarn cargoes recently.” The source reported receiving Uzbekistan homo-PP at $1050/ton CFR China, LC AS term, yet did not bid since it is unable to compete with local materials.

In Southeast Asia, the general market condition remains largely unchanged from the previous trading day though international traders reported receiving additional purchase inquiries from Vietnamese buyers for Saudi’s LLDPE film. “However, buyers are trying to negotiate for additional discount. We maintain firm stance at $1150/ton CIF term as we have sold out initial allocation and currently are requesting more cargoes from principal supplier,” a distributor said. Domestic market in Vietnam also hold steady today.

In contrast, buying interest in Indonesia sees little movement and even with competitive LLDPE film prices from local producer; buyers are showing no urge to make replenishment. “As a result, many traders did not replenish material from import market in recent weeks. Many of our manufacturing customers are complaining about slow end product business, hence market might remain low for a little longer,” a trader in the country commented.

In addition, it also appears that Malaysian buyers have made sufficient purchases in order to prepare for the Ramadan end product orders after two consecutive months of local price cuts. A trader reported, “We called few regular customers today but most claimed to have comfortable stock on hand while some are negotiating for further discounts. We are monitoring further development before implementing any adjustment.”

In the regional PP market, Southeast Asian suppliers continue to follow the softening trend, implementing price reduction to Indonesia amid weak demand condition in this market. Meanwhile, import homo-PP offers to Vietnam hold relatively stable in the range $1070-1080/ton CIF, LC AS term for Chinese and du origins. There are very limited numbers of new offers observed since many Japanese and Korean trading houses are still on holidays. “ We believed that PP market might see at least another $20/ton reduction in the near term, hence we plan not to procure any cargoes this week,” a buyer said. Another market source received Chinese regular homo-PP yarn at $1070/ton CIF Vietnam said, “This is a new plant using reputable technology. We placed bid at $20/ton lower and with the available of form E, it would be more competitive than others.”