Asia Daily PP and PE Overview 19 May 2017

In China, the Dalian Commodity Exchange settled the final trading day of the week with a big jump. PP contract for September delivery closed at CNY339/ton ($49/ton) higher, at CNY8095/ton ($1003/ton without VAT). LLDPE contract leaped CNY215/ton ($31/ton) at CNY9350/ton ($1158/ton without VAT).

Trading activities in domestic spot market remain pretty healthy with a good number of deals reported. Traders continue to implement another CNY100-200/ton ($14-28.ton) hike on both PP and PE cargoes to reflect better demand condition. Discussing with a trader during Chinaplas, the source said, “Many converters also come back to make replenishment toward the end of the week as they fear that prices might continue to firm up in the coming week. While the general outlook appears to be positive, we concern that this trend might be just temporary.”

In the import market, Indian maker keep offers for homo-PP to the country at $980/ton CFR China, LC 30 days term while other sellers are not showing much interest in giving prices. Meanwhile, several deals for Iranian PE cargoes are reported at $990-1000/ton for LLDPE film, $1090-1115/ton for LDPE film and $1000/ton for HDPE blow moulding and injection. “We think these cargoes are very competitive, hence we purchased some quantity. At the meantime, we are waiting for other suppliers to open new prices,” a buyer reported.    

In Southeast Asia, market is rather calm on the final trading day of the week with most PP suppliers claimed to have sold out available quantity. With buying sentiment in Vietnam showed improvement and firming propylene costs, players expected market has reached the bottom and likely to experience a small hike in the coming week.

A Vietnamese buyer said, “Most suppliers opened offers earlier this week have now stopped taking additional orders. Despite there is little improvement observed in domestic ground, we do expected international suppliers to adopt firmer stance in the near term.” In fact, in the previous trading day, Chinese coal based homo-PP offered to Vietnam increased $20/ton to reach $1030/ton CIF Vietnam, LC AS term. However, it is reported that the supplier has withdrawn the offer today. A market source added, “We confirmed to purchase some quantity of this cargo after the adjustment, yet the supplier did not accept the order. This could be the result of healthy demand in local China market this week, which discouraged export activities.”

Meanwhile, Indonesian buyers are very much of in dilemma, as import offers appear to be stabilizing yet local traders continue to hold prices at very competitive levels. A converter bought local homo-PP at $1120/ton FD Indonesia, cash term said, “We have been trying to bid Philippines homo-PP at 1060/ton CIF Indonesia term, however, the supplier refused to accept. Looking at the demand situation in Indonesia, we think it is not likely that market could head for a strong rebound in the near term. We prefer to hold conservative stance.”

A common concern shared by many Southeast Asian buyers regarding the firming trend in the regional PP market is the sustainability. Players commented that improved sentiment in the PP market is mainly driven by stronger buying interest in China throughout this week, yet fear of the sustainability on this condition remain prominent.

In contrast, the regional PE market is rather quiet and the drastic drop in ethylene costs has had buyers side-lined waiting for clear indication. On the other hand, major Malaysian producer managed to sell off the available quantity for LDPE film to Vietnam after conceded to a total price cut of $90/ton month on month basis. “Other suppliers are offering at slightly lower and we think room for further reduction is still available,” a Vietnamese buyer said.