Asia Daily PP and PE Overview 20 July 2017

In China, futures market escalated to the highest levels seen in several weeks after witness drastic swing throughout the trading day. September delivery contract for PP leaped CNY246/ton ($36/ton) at CNY8495/ton ($1074/ton without VAT). LLDPE contract rise steeply by CNY385/ton ($57/ton) to close at CNY9650/ton ($1220/ton without VAT).

A dominant topic discussed in local ground today is the ban in import scrap plastics, which might come to effect by end of this year as Chinese government notified the World Trade Organisation. The ban would include most waste plastics including PVC, polyethylene and polystyrene, as well as mixed papers and slag. China imported about 7.3 millions tons of waste plastics in 2016, which is nearly 60 per cent of the world’s total imports, with Hong Kong, Japan and USA topped the exporter list. Meanwhile, many recyclers in China were forced to temporarily or permanently shutdown this month as they were found violating environment regulation. “This affected the supply for recycled polyolefins, which in turn might stimulate the demand for prime grade cargoes,” a trader commented. This acts as the main driver behind the futures rally today.

Demand for LLDPE film in Southern China area appears to be healthy, from which buyers not only accepted a hike of CNY100/ton ($15/ton) for domestic materials, purchases for import cargoes also take place at similar hike. A trader purchased Saudi Arabia and Qatar LLDPE film at $1135-1140/ton FCA China, LC AS term said, “August and September is normally the high demand season for flexible packaging sector, and with the current supply condition, we decided to collect some stock for mainstream materials.”

It is reported that import homo-PP offers to China also inched up slightly just that international suppliers show more interest in directing cargoes to other markets, where margin is better.

In Southeast Asia, after successful hike implemented on import homo-PP cargoes, international suppliers continue to put effort in lifting import PE prices, regardless of buyer resistance faced. Though there have been several deals for import HDPE and LLDPE film to the region reported at higher prices, many other buyers prefer to take cautious stance to monitor further development in China market.

An international trader reported to have sold Philippines HDPE film at $1100/ton and Indian LLDPE film at $1060/ton to Vietnam, all based on CIF, LC AS term said, “It is hard to increase LLDPE film prices as supply is more comfortable and other traders are still keeping prices low. On the other hand, we only able to move 100 tons of Philippines HDPE film at $20/ton increased.”

Sellers are very active in testing market respond with higher prices and a few of major suppliers have withdrawn offers. In fact, Iranian, Thailand and Equate producers have all suspended offering and raise intention to up-adjust prices in the coming days. A trader was offering Iranian LDPE film at $1180/ton CIF Vietnam, LC AS term said, “We plan to lift the price by $20-30/ton due to limited supply. Buyers are not very interested, yet we believed that continued recovering market would encourage purchasing activities.” Equate LLDPE and HDPE film jumped $20/ton on the day, reaching $1120/ton CIF Vietnam, LC AS term.

In the PP market, major Saudi Arabia producer announced new offers to Vietnam in the previous trading session managed to conclude approximate 300 tons of yarn grade without any discount, at $1080/ton CIF, LC AS term. “We have sold most quantity to India and Bangladesh as demand here are better. Vietnamese converters have accepted the hike, but traders are far less confident to make replenishment,” a distributor said.

In addition, Indonesian players reported seeing better buying interest for local homo-PP as international suppliers take firmer stance on import cargoes claiming tight availability. A good number of deals have been observed though traders have yet to implement any major price hike. CommoPlast data showed that compared to earlier July, domestic homo-PP yarn based on FD Indonesia, excluding VAT, cash term has gained approximate $25/ton with a trader commented, “Due to previous production issues, local producers are not having sufficient cargoes either, therefore buyers become more active in searching for material in the distribution market. Demand is on recovery track, especially with the traditional high demand season just around the corner.” Many converters therefore are planning to make additional purchases for longer production need.