Asia Daily PP and PE Overview 11 July 2017

In China, futures market regains some strength on the second trading day of the week. September delivery contract for PP inched CNY29/ton ($4/ton) higher to reach CNY8067/ton ($1014/ton without VAT) while LLDPE contract increased CNY40/ton ($6/ton) to close at CNY9005/ton ($1132/ton without VAT).

Thanks to firmer futures trading, local traders lifted offers for both PP and PE by CNY50/ton ($7/ton) from yesterday, yet most deals are reported at unchanged levels. A trader sold some PP cargoes to domestic buyers said, “It is traditional slow season for PP, and hence our customers only source material based on need basis. On the other hand, we think PP market has more stability than PE and we are monitoring movement of Indian and Iranian material.”

In the import market, Indian producer lifted homo-PP prices by $10/ton from last month to reach $990/ton CFR China, LC 30 days term. This offer is deemed to be less competitive than local materials, “However, there are still purchases as the supplier is only able to allocate 100-200 tons to each buyer. The producer is planning a maintenance shutdown end of this month, and with satisfactory demand in local India market, export quantity might remain limited in the near term,” a trader said.

There are also several deals for Iranian LLDPE film reported at $1015/ton CFR China term, and prices below the $1000/ton threshold have not repeated this week. “Most low cost cargoes are sold out and with increasing local prices, we see more buyers come back to import ground to seek for competitive materials. This could support the market trend.”

In Southeast Asia, the general sentiment remains calm and buyers are very cautious about making replenishment. More regional buyers believed that import homo-PP has reached the bottom and that prices might follow the stable trend throughout July. A market source commented, “Limited supply from Middle Eastern suppliers helps to halt the softening trend. Market temporary found the bottom, however, we continue to monitor the demand condition to gauge the likely direction in the coming month.”

Indonesian buyers have been reluctant in making replenishment from import market in the past several weeks due to the available of competitive local cargoes. And though this sentiment remains in place this week, it appears that buyers here become more willing to accept current prices. An international trader reported to have sold Saudi homo-PP at $1065/ton CIF Indonesia, LC AS term said, “Customers requested for steep discount, however, we only agreed to $5/ton reduction on deals due to limited cargoes on hand. This momentum could persist if local prices extend the firming trend.”

In contrast to PP, the regional PE market is still searching for direction and there is a lot of confusion among buyers due to diverged pricing strategy from suppliers. A South Korean producer lifted PE prices to Vietnam by $5-10/ton from last week, reaching $1115/ton for both HDPE and LLDPE film, CIF, LC AS term. However, buyers are not responding positively toward the new prices. A buyer informed, “Other origins are very competitive and we might need more time on the side-line before taking position.”

Iranian materials are showing up in Vietnam more frequently in recent weeks at relatively competitive levels. To overcome the payment term constraint, traders are offering additional discount for customers paying by telegraphic Transfer (TT). A trader offer final prices for Iranian material at $1050/ton for LLDPE film and $1160/ton for LDPE film, CIF Vietnam, LC AS UPAS. The source said, “We are planning to expand market for Iranian material in the near term. Many buyers are concern over the payment issues; however, we are able to offer full flexibility when it comes to this matter. We hope this could activate market interest for this cargo.”

In related production status news, Thailand’s SCG restarted its 400,000 tons/year HDPE line after experienced emergency shutdown on 28 June. The unit might be able to achieve stable production within this week, however, export allocation for July remain affected.