Asia Daily PP and PE Overview 26 June 2017

In China, futures market opens fresh week on strong notes with both contracts for PP and PE jump three digits in value. PP futures added CNY132/ton ($19/ton) to close at CNY7725/ton ($965/ton without VAT) while LLDPE contract gained CNY110/ton ($16/ton) to reach CNY8820/ton ($1102/ton without VAT).

Despite firmer futures trading, the number of transaction observed in domestic spot market is rather limited, as confidence level remains low. Traders attempted to lift offers for both PP and PE by CNY50/ton ($7/ton) with hope that arbitrage takers would be active in leveraging the price gaps. “We are unable to conclude satisfactory number of deals today. Yet, we believed that local ground might not fluctuate too much for the remaining of the month,” a trader commented. Besides, there is tightness of LLDPE film with addictive at the moment in domestic spot market.

Meanwhile, very few international suppliers announce fresh import prices on the first trading day of the week, especially amid the Ramadan holidays. Indian maker continue inviting buyers to place bid for 7000 tons of PE reported late last week with a buyers commented, “We insisted on the level of $960-970/ton CFR China, LC AS term for some quantity of HDPE and still waiting for the producer’s respond. Our customers are still not used to this grade yet, therefore we just plan to purchase a small quantity.”

Another trader managed to sell Iranian HDPE film at $1070-1080/ton CFR China, TT in advance term added, “Buying interest is still low and other Asian suppliers have cut their offers in the previous week to entice demand. With the current market condition, we fear that more discount must come in the near term.”

In Southeast Asia, market is rather quiet as Malaysian and Indonesian buyers are till on holidays. Couple of Saudi Arabia producers announced fresh PP and PE offers to Vietnam with reduction from last month and yet, there are little changes in term of buying attitude among Vietnamese buyers.

A buyer received new offers for Saudi HDPE and LLDPE film at $1100/ton CIF Vietnam, LC AS term said, “Our supplier informed that there could be $20/ton discount for serious buyers, however, we need a careful consideration over the purchases as local market is very weak.” Another Saudi Arabia producer also opened new offers at $1110-1120/ton for LLDPE film and $1090/ton for HDPE film, CIF Vietnam, LC AS term and players are expecting deals at $1080/ton since most suppliers have come to this levels.

Besides, import HDPE blow molding from USA to Vietnam also drop another $30/ton from earlier this month to $1010/ton CIF, LC AS term today, and most bids are reported at $1000/ton with the same term. “The market condition is just too depressing. We are waiting for our principal supplier’s feedback on the bid levels and we think very likely that this could be accepted.”

Despite slow demand, the regional PP market is gaining some support from continuous firming upstream costs. Propylene based on CFR China term jumped $43/ton on an average last week to reach $881/ton on Friday. Industry expert believed that there is still room for further increase in the near term as supply is tightening amid several major cracker shutdowns. “However, we think propylene might only gain moderately since downstream PP market is very weak in China,” a market source added. Stricter environmental regulation in China is expected to hit demand harder this second half of the year, setting a bearish tone for the market.

“Couple of converters are placing bid for Saudi homo-PP at $1035/ton CIF Vietnam and we are checking on the interest of other buyers. Prices at $1050/ton and above at the moment attract no attention,” an international trader commented.