Asia Daily PP and PE Overview 31 May 2017

In China, futures prices on Dalian Commodity Exchange fell on the first trading day after the Dragon Boat Festival, setting the main tone for the whole market. September delivery contract for PP dropped CNY155/ton ($23/ton) to close at CNY7848/ton ($982/ton without VAT). LLDPE contract loses CNY105/ton ($15/ton) to reach CNY9000/ton ($1126/ton without VAT).

There is very limited movement observed in the domestic spot market with most suppliers are attempting to maintain prices unchanged. A trader reported to have sold 100 tons of homo-PP to local buyers said, “We maintain our prices unchanged compared to last week. Most of our customers are not active yet; therefore it is hard to gauge the likely market direction in the coming days. However, it normally the start of off-peak season after the Dragon Boat Festival.”

Other players in Northern area reported receiving various discount schemes for LLDPE film from a major producer. Price cut ranging from CNY100 ($14/ton) to CNY150/ton ($22/ton) for quantity 200 and 300 tons above respectively. A trader purchased the cargoes informed, “Our principal supplier is trying to deplete some cargoes as stock piled up during the holiday. Futures market is not very good and we just hope that prices hold stable for the remaining of the week.”

In the import market, traders lifted offers for Indian homo-PP by $15/ton from last week, reaching $995/ton CFR China, LC 90 days term and managed to conclude deals at no further discount. A trader claimed to have sold few hundred tons of the cargoes at the mentioned price said, “Buyers are not very eager to make replenishment, however, thanks to firmer propylene costs, we are able to achieve hike target. We hope local suppliers would maintain firm stance in the coming days, which in turn might support the import ground.”

Meanwhile, the lower end prices of import USA PE material shown in the previous weeks has not repeated today. Traders are taking firmer stance on their cargoes though it is still unsure if other international suppliers, including Iranian sellers would continue to offer at competitive prices to deplete inventories. Therefore, wait and see remains the primary tone of the PE market.

In Southeast Asia, the general sentiment turn mediocre today and despite most suppliers have already concluded businesses for June shipment, buyers are still asking for discounts from other sellers. A South Korean maker sold some PE cargoes to Vietnam at $1130/ton for both LLDPE and HDPE film, CIF, LC AS term said, “Our customers are negotiating very hard for additional reduction pointing to the presence of competitive Iranian materials. Many show no interest in placing bids.” In fact, several deals for Iranian LLDPE film are reported at $1080/ton CIF Vietnam this week for prime grade and at $1050/ton for off-grade cargoes. This is expected to put additional pressure on the PE market in the near term.

Meanwhile, a major local producer in Malaysia implemented MYR300/ton ($70/ton) reduction on all PP and PE cargoes for June delivery to domestic buyers. Market is not responding very positively in spite of the larger than expected price cut. A buyer said, “Demand for our end product is rather sub-due as this is the Ramadan season. The producer are still carrying some of our backlogs, hence we might only make a small purchase this month. This is third month is a row the maker reduce prices.”

The regional PP market is witnessing more activities and deal done levels are slightly higher compared to last week, indicating a stronger prospect for the PP outlook. A trader sold Saudi Arabia homo-PP at $1060/ton CIF Vietnam said, “We have very limited quantity this month and we hope that buyers could accept the firming trend.” There are also couple of deals for Saudi homo-PP injection at $1045/ton CIF Vietnam today, though the supplier only had 200 tons allocation and sold out very quickly.

In addition, a major Indian producer has also announced fresh offers at $1065/ton to Vietnam and $1070/ton to Indonesia, all based on CIF, LC AS term. A distributor offered on behalf of the producer informed, “Our principal supplier refused any price negotiation. Customers are showing reluctant and we think market might need a little more time to accept this levels.”