Asia Daily PP and PE Overview 22 June 2017

In China, futures market extended the falling trend toward the end of the week. September delivery contract for PP drop another CNY82/ton ($12/ton) to reach CNY7547/ton ($944/ton without VAT). LLDPE contract settled at CNY8090/ton ($1087/ton without VAT), some CNY155/ton ($22/ton) lower than the previous session.

Similar to the futures market, domestic spot ground again sees CNY50-100/ton ($7-15/ton) discount from yesterday with very few transactions observed. It is heard that major local producers are facing inventories pressure as a result of persistent weak demand throughout June, which lead players to speculate of further reduction to emerge in the coming days. “Suppliers are after mid-year target at the moment, hence we prefer to wait. This is also because demand for our end product is also slow,” a converter commented.

In the import market, couple of deals for Saudi Arabia homo-PP are reported at $1000/ton CFR China, LC AS term. “The purchased quantity is rather small. Buyer made replenishment because of the lack of Middle Eastern cargoes in recent month, however, many converters have switch to use a larger portion of local materials to save costs,” a trader said.  

In Southeast Asia, market remains very calm and traders reported facing difficulties in attracting buying interest for Saudi origin PE cargoes offered in the previous session. Players are generally not confident about the near term market outlook pointing to plunging energy complex, comfortable supply and sluggish buying interest across Asia.

A trader active in Vietnam market said, “Buyers are on wait and see as many believed that import Middle Eastern HDPE and LLDPE film could soon reach $1050/ton mark given the current large ethylene-PE spread. We are unable to conclude any deal till now.”

Meanwhile, a major Malaysian producer slashed LDPE film offers to Vietnam by $40-50/ton from last month, bringing latest offers to $1240/ton CIF, LC AS term. Several deals for this cargo are reported shortly after the price announcement at only $10/ton discount from initial offer, at $1230/ton CIF Vietnam term. A buyer commented, “It is likely that other origin might fall below $1200/ton threshold in the near term, however, we still purchased this cargoes due to customer requirement.”

While suppliers are limiting the range of price reduction in Vietnam, import PE offers to Indonesia appears to be spiraling down in a faster pace. Besides the large reduction introduced by major Saudi Arabia producer reported earlier, today a Kuwait maker open fresh prices at $1100/ton for HDPE film and $1110/ton for LLDPE film, CIF Indonesia term. “Yet, we were informed that prices are negotiable and some bid indications were given at $30-40/ton lower than list price. We think $1070-1080/ton is now the benchmark levels in Indonesia,” a buyer commented. Slow demand and competitive local prices are blamed for such strong pressure on import ground.

The regional PP market is slowing down too in spite of strong propylene costs and limited supply from Middle Eastern suppliers. Market was hoping that healthy buying interest from Indian Subcontinent markets could suspend the softening trend in Southeast Asia, however, the effect did not come as clear. “Market is directionless now. We are unable to gauge the trend in the coming month. However, as long as buying interest in China remains slow, it might be unlikely that prices could revive,” a market source commented.