Asia Daily PP and PE Overview 7 June 2017

In China, futures market is mixed today. September delivery contract for PP edged CNY34/ton ($5/ton) from yesterday to reach CNY7695/ton ($969/ton without VAT). LLDPE contract loses CNY40/ton ($6/ton) to close at CNY8860/ton ($115/ton without VAT).

There are better numbers of deals reported in the domestic spot market for both PP and PE as traders conceded to another CNY50-100/ton ($7-15/ton) discount. Just yet, cargoes offered at the lower end of the overall price range catch better attention. A trader sold regular homo-PP yarn at CNY7650/ton ($962/ton without VAT) said, “BOPP converters are facing squeezed margins amid rising competition. Therefore, many of our regular buyers are switching to PP powder, as prices are much lower than resin type. We are still having quantity on hand and willing to negotiate with serious buyers.”

Another trader sold locally held Kuwait HDPE film at CNY9800/ton ($1232/ton without VAT) said, “Buyers are complaining about the large gap between local and import prices, at the meantime preferred ready cargoes. Many are still hoping to achieve more discount from international suppliers before taking position.”

In the import market, Middle Eastern suppliers have stepped back on PE offer to the country by $20-30/ton from last week, bringing import Middle Eastern PE to China to $‎1070-1090/ton for HDPE film and $‎1080-1100/ton for LLDPE film, CFR China, LC AS term. A buyer received offers for Qatar material at $1070/ton for HDPE film and $1080/ton for LLDPE film, CFR China, LC AS term said, “We are a bit concern over the recent Middle East conflict which might affect shipment for these cargoes. However, prices are rather reasonable. We are still considering whether to take these cargoes as Iranian materials are piling up at the main ports waiting for payment to be cleared. This is likely to pressure the market in the near term.”

In Southeast Asia, suppliers are very active in giving offers for both PP and PE and most have indicated the willingness to negotiate with serious buyers. A number of deals for PE are concluded in Vietnam at small discount and it appears that sellers are avoiding selling below the $1100/ton threshold.

A trader sold Philippines HDPE film at $1100/ton CIF Vietnam, LC AS term said, “Most customers were placing bids at about $1080/ton however we could not accept. We are still seeing demand for HDPE film in Vietnam at the moment, just that the market is too competitive.” There are also deals for Kuwait HDPE film at $1105/ton CIF Vietnam, TT 15-85 term reported.

Discussing with Vietnamese players, it is found that many buyers are in dilemma whether to stock up material citing the concern that Middle East conflict might affect supply in the medium term. “We are considering fresh purchases however prices have yet to reach our expectation,” a buyer said. There are also discussions among local traders on whether to hold the current on hand cargoes or to sell at the declining domestic prices. In fact, domestic PP and PE prices in Vietnam are catching up with the soft trend in import ground this week.

In the import PP market, Chinese material remains the dominant across the region and it appears that sellers for this origin are more open to negotiation than others. Couple of deals for regular Chinese homo-PP yarn are reported at $1050-1060/ton CIF Vietnam today, which is similar to the level observed during early May.

Continued falling propylene cost has had Southeast Asian buyers loosing confident and becoming more reluctant to make purchases if suppliers are too firm. Many are hoping to obtain dutiable cargoes at below $1050/ton threshold as duties free Chinese parcels have been concluded at this level. A regional trader offered Middle Eastern and Africa homo-PP to Indonesia at $1060-1070/ton CIF, LC AS term said, “Indonesia customers are mostly on holiday mood and there is very few price discussion going on.” The remaining of June might be quiet in Indonesia, players said.