Asia Daily PP and PE Overview 5 June 2017

In China, the futures market extended the weakening trend since late last week, closing with three digits reduction. September delivery contract for PP fell another CNY108/ton ($16/ton) to reach CNY7661/ton ($963/ton without VAT). LLDPE contract closed at CNY8900/ton ($1119/ton without VAT), down CNY145/ton ($21/ton) from last week.

In domestic spot market, traders were attempting to maintain prices unchanged from last week, however, built up pressure forced sellers to offer discount of CNY50-100/ton ($7-14/ton) to conclude deals. A trader sold 100 tons of homo-PP to local buyers after conceded to discount said, “Buyers are very selective when it comes to purchases and only cargoes at the lower end of the overall price range can attract buying interest. We have also concluded few export deals for coal based homo-PP at $1030/ton FOB China term.”

Meanwhile, it is also reported that at least seven LLDPE plant in China are undertaking maintenance shutdown at the moment, which tighten local supply and support traders to take firmer stance on the cargoes despite the off-peak season. “The domestic LLDPE market is relatively more stable than other grade. We think demand would only pick up toward end of July and buyers need to prepare for the Single Day in November.”

In the import market, USA suppliers are collecting bids for their PE cargoes and many buyers are placing bids at $970/ton CFR China for HDPE blow moulding. A buyer said, “We are still waiting for the supplier to revert on this bid levels. We are not confident to accept higher prices.”

In Southeast Asia, the general sentiment is rather heavy as ethylene costs plunged deeper to multi months low causing concern among regional buyers. There are not many new PE offers observed on the first trading day of the week though couple of sellers have stepped back on their prices. In fact, Philippines HDEP film sees a $20/ton reduction week on week basis, reaching $1110/ton CIF Vietnam, LC AS term. “We really have no confident to make purchases now,” a buyer said.

Vietnamese buyers also reported receiving re-export PE cargoes from China today. The offers consist of Kuwait LLDPE film at $1120/ton and UAE LDPE film at $1220/ton, CIF Vietnam, LC AS term, prompt shipment from China. An international trader selling direct UAE LDPE film cargoes to Vietnam said, “We are offering the same cargoes, ship direct from Singapore at $50/ton higher than this re-export material. The downtrend is so contagious and we think buyers would withdraw further to the sideline now.”

Another major concern among Southeast Asian players is the escalated political tension in Middle East, which might hurdle shipment from Iran and Qatar. There is still no clear signal on how the issue would impact the market at the moment, yet regional buyers are taking cautious stance to monitor further development. Some were hoping that such situation could overshadown the depressed upstream market and give the sentiment a boost.

The regional PP market remains on the stable to firmer notes with only few new offers reported. Philippines homo-PP hike $20/ton from last week to reach $1100/ton CIF Indonesia with a trader said, “Our customers are still asking for old prices on deals. We are still considering as the general supply seems tightened.”

Meanwhile, a major producer in Indonesia down adjusted offers again to domestic buyers on the first trading day of the week, marking ten consecutive week of reduction. This surprised many buyers in the country as the maker claimed to have been free from any inventories pressure, from which there were some signal of firming up beaming in the previous week.