Asia Daily PP and PE Overview 21 June 2017

In China, futures market loses steam with September delivery contract for both PP and PE closed at lower level. PP futures losses CNY16/ton ($2/ton) to reach CNY7636/ton ($956/ton without VAT). LLDPE futures down CNY55/ton ($8/ton) to reach CNY8840/ton ($1106/ton without VAT).

In domestic spot market, weak buying interest encouraged sellers to implement another CNY50-100/ton ($7-15/ton) reduction and suppliers are not showing much optimism for the remaining of June. A trader usually can sell up to 300 tons of material to local buyer said, “Today we could only conclude a small deal. We are not able to cut prices too much given high costs, at the meantime, we are cautious about making replenishment as import ground might still have room to move lower.”

In fact, several deals for Thailand HDPE film were reported at $1080/ton CFR China, LC AS term late last week and this week buyers are requesting for similar levels. This indicated $20/ton reduction from initial offers. “The supplier is still considering our bids claiming lack of availability due to the upcoming maintenance. However, without discount it might be hard to conclude deal,” a buyer said.

Import Russian LDPE film continue to soften, reaching $1060/ton CFR China today while Iranian LLDPE film remain at $1000/ton CFR China, TT in advance term. “We requested for $20/ton discount on Iranian LLDPE film on deals and currently waiting for the supplier feedback,” a buyer said.

In the import PP market, there are very limited numbers of new offers and Chinese suppliers are pushing for export instead of importing materials. The Chinese PP market is changing dynamic, which might be worrisome to international suppliers.  

In Southeast Asia, couple of regional and international producers announced July shipment offers mostly at softer levels from last month, however transaction is very limited. A major Saudi Arabia producer cut HDPE film price by $30/ton and LLDPE film prices by $50/ton from last month, bringing latest offers to $1070/ton and $1080/ton CIF Indonesia respectively. An international trader offered on behalf of the producer commented, “Demand for PE in Indonesia is much weaker than PP and buyers are not showing great interest as the holiday mood prevailed. We think this price level is already very competitive, and despite many are asking for additional discount on deals, we plan to hold our offers.”

The same producer also announced HDPE and LLDPE film prices at $1100/ton to Vietnam though traders initiated price cut to offers at $10-20/ton below official price list. “Buyers are not very responsive as many fear of additional reduction in the near term. We have not been able to collect sufficient bids and therefore we might need to monitor further.”

Players blamed the recent weakness in the energy complex that has negatively impacted the general sentiment. Besides, domestic LLDPE film market is going down in Vietnam as a result of bloated supply and persistent sluggish demand condition. According to CommoPlast data, local LLDPE film in Vietnam this week fell by additional VND300,000-500,000/ton ($13-22/ton) from last week.

In the PP market, it appears that import homo-PP to Vietnam soften slightly from last week and buyers here are very cautious about making fresh replenishment. A converter purchased coal based homo-PP yarn at $1030/ton CIF Vietnam, LC AS term said, “We are just sourcing based on need basis as market does look like still have room for further reduction.” This comes even with healthy demand in India that attracted sellers to divert their cargoes there and firming propylene costs. Even import homo-PP from Philippines and South Korea to Vietnam also drops $10/ton today.

Meanwhile, in Indonesia, major Singaporean and Malaysian makers announced July shipment offers with reduction, bringing latest prices to $1090-1120/ton CIF Indonesia, LC AS term. A buyer said, “We placed bid at $1080/ton for Malaysian homo-PP, however the producer rejected. Our plant would start to off for Ramadan tomorrow, hence any negotiation might need to postpone till early July. Local suppliers lifted offers too aggressively recently and support the import market.”