Asia Daily PP and PE Overview 10 July 2017

In China, futures market loses steam on the first trading day of the week. September delivery contract for PP reduced CNY53/ton ($8/ton) while LLDPE contract slipped CNY130/ton ($19/ton). Both contract settled at CNY7985/ton ($1004/ton without VAT) and CNY8860/ton ($1114/ton without VAT) respectively.

Despite softer futures trading, domestic sellers still attempted to lift PP and PE prices by CNY50-100/ton ($7-15/ton) on the back of lacking sales pressure. Total PP and PE inventories at domestic producers’ warehouses are reported at about 690,000 tons today, which is well below the psychological threshold. However, the upside of the market might be limited as it is the traditional slow season at the moment,” a trader commented.

In the import market, couple of trader decided to stepped back on their offers for Iranian HDPE cargoes to speed up sales process. A trader sold 1000 tons of Iranian HDPE blow molding at $1035/ton CFR China, LC AS term said, “The cargoes are arriving by 23 July and we requested customer to open LC immediately. With current price levels in domestic ground, this cargo would still yield an earning of CNY200-300/ton ($29-44/ton). Other traders holding firm on prices are facing difficulties in selling in volume.”

In addition, traders are offering Indian homo-PP at $1005/ton CFR China, LC 90 day term and no deals reported. A trader said, “These are our remaining cargoes from previous purchases. Buyers are giving higher propriety to local materials due to slow end product business. Most international suppliers are not having sales pressure, hence we think market would be more stable this month.”

In Southeast Asia, the general sentiment is calm and transaction is rather limited as buyers are mostly taking cautious stance amid slow end product businesses. It becomes clearer that import homo-PP to the region is heading for stabilisation with limited Middle Eastern cargoes observed across Southeast Asia.

An international trader sold Saudi Arabia homo-PP at $1065/ton CIF Indonesia, LC AS term said, “Buyers were asking for much lower levels, however, we only can offer $5/ton discount from initial prices due to limited allocation. Very few regular buyers enter the deals since local materials remain very competitive.” Domestic producer in Indonesia lifted local PP prices by $10/ton from last week believing in healthier buying interest in the near term.

Meanwhile, several other international traders claimed to have no quantity of Saudi homo-PP for Vietnam market this week and there is a small price increment reported on Southeast Asian cargoes. Philippines homo-PP injection emerged at $1060/ton CIF Vietnam, LC AS term, which is $10/ton higher week on week. A buyer commented, “We are planning to make additional replenishment. Despite tight availability of Middle Eastern cargoes, we see demand in most other markets remain mediocre. There is no strong factor to support a significant hike in prices, however, firmer propylene costs might prevent any further reduction.”

In the PE sector, there have been reports about deals for Indian LLDPE film in the range $1030-1035/ton CIF Vietnam term. What has had buyers confused is that South Korean maker decided to implement $5-10/ton hike on PE offers to Vietnam today, reaching $1115/ton for both HDPE and LLDPE film. “We are surprised by the move. However, we hope that with a series of production issues, the regional PE market would regain some strength in the near term.”

In addition to the unexpected shutdown at Saudi’s PetroRabigh and Thailand’s SCG; Kuwait’s Equate is forced to take its 850,000 tons/year cracker off-stream today due to technical issues. Downstream units, including PE plant are affected. The complex might need two weeks to complete the repair job. Distributors for this origin informed that they might only open offers again by beginning of August.

Meanwhile, post holiday demand in Indonesia is disappointed and converters are waiting for end product orders before making replenishment. Local LLDPE film based on FD term is now traded below homo-PP. A HDPE bag maker informed, “Compared to June, end product order this month drop about 50%. We are able to obtain materials in the distribution market with additional discount of $10/ton from producer’s price list, however, we might postpone purchases to next week.”