Asia Daily PP and PE Overview 15 May 2017

In China, futures prices on Dalian Commodity Exchange open the new week with impressive hike. Contract number 1709 for September delivery jumped CNY211/ton ($31/ton) for PP reaching CNY7714/ton ($956/ton without VAT). LLDPE contract settled at CNY9060/ton ($1122/ton without VAT), some CNY270/ton ($39/ton) increased from last week.

Trading activities in local market therefore improved visibly in which trader reported to have concluded a good number of deals even after lifting prices by CNY50-100/ton ($7-14/ton). Meeting with a trader in Guangzhou, who were receiving high number of calls, “Sales are very good today thanks to improved buyer confident after energy market recovered and bright prospect from the One Belt One Road trade initiative. We plan to lift our offers slightly in the next trading day.”

In contrast, buying interest in the import market remains relatively sluggish and sellers are diverting some of their allocation to other market as a result. On the other hand, a major Thailand producer cut PE prices to China by $10-15/ton, bringing latest offers to $1120/ton for HDPE film, $1130/ton for HDPE yarn, $1180/ton for LLDPE film, $1200/ton for LDPE film and $1230/ton for LDPE heavy duty, all based on CFR China, LC AS term. A trader received the new offers said, “Our principal supplier reduced offers in an attempt to stimulate purchasing activities; however, we are not seeing satisfactory results. Domestic materials are still competitive and it seems buyers are not confident in sourcing shipment cargoes these days.”

In Southeast Asia, there are very limited trading activities on the first trading day of the week as some buyers are away for ChinaPlas event while others are evaluating the impact of stronger energy values on the market. Couple of major regional and international suppliers announced fresh prices at stable to softer levels from last week.

A major Thailand maker implemented $10-15/ton price cut on both HDPE and PP cargoes to Vietnam, bringing latest offers to $1140/ton for HDPE film, $1055/ton for homo-PP yarn and $1060/ton for PP block copolymer, all based on CIF Vietnam, LC AS term. The narrow gap between homo-PP yarn and PP block copolymer surprised many buyers in the country and several converters have expressed the intention to make small purchases. Source close to the producer informed, “These allocations were initially for China market. However, buying interest in China is really weak recently, therefore we decided to divert the cargoes to Vietnam. We are monitoring respond from Vietnamese buyers while also analyzing other potential outlet.”

Import homo-PP from Philippines and Singapore to Indonesia also dropped $20/ton week on week basis, reaching $1100/ton CIF Indonesia, LC AS term. Buyers here are not showing strong interest pointing to the available of local materials.

Meanwhile, the situation across the local markets within the region isn’t very positive. Both major producers in Indonesia slashed local PP and PE prices today, marking fourth straight falling weeks despite tight availability for certain grades. Domestic PP and PE offers in Vietnam has also softened with a trader commented, “However, we think market shall revive toward second half of June since traders haven’t made sufficient purchases over the past couple of months. Besides, it appears that Middle Eastern suppliers have depleted a considerable quantity of inventories before the Ramadan season, which means sales pressure is now lower. We plan to make purchases by end of this month or early June.”

Indonesian buyers are portraying similar expectation that the bottom is near and that many buyers are monitoring price movement very closely before making replenishment. A converter received local HDPE film at IDR15,050,000/ton ($1130/ton) without VAT, FD Indonesia, cash term. The source said, “This price level is very competitive from our perspective, hence we are replenishing gradually. We think market is nearing the bottom, room for further reduction is getting very narrow.”