Asia Daily PP and PE Overview 26 July 2017

In China, futures market remains soft with contract 1709 for LLDPE concluded at CNY25/ton ($4/ton) lower from the previous session at CNY9630/ton ($1219/ton without VAT. PP contract gain only CNY15/ton ($2/ton) to close at CNY8500/ton ($1076/ton without VAT).

In the mainstream spot domestic market, suppliers continue to lift PP and PE prices by CNY50-100/ton ($7-15/ton) despite the absence of buyers, claiming lack of inventory pressure. “However, arbitrage traders are withdrawing from the market and attempting to deplete some stock on hand with discount. Any downswing is unlikely to take place in the remaining of July, though we do expect minor correction in August.”

In the import market, Saudi’s homo-PP yarn concluded at $1070/ton CFR China, LC AS term which surprise many players. “This is too high compared to the current local market; yet we decided to purchase due to the long absence of the supplier in the market,” a trader said. Though the deal consists of rather small quantity, it would pedal market higher.

The PE fever in China is cooling down as market resistance built up. Two weeks of continuous firming that push import HDPE and LLDPE film to China up approximate $30-35/ton on an average, is now appear to be nearing the peak. Cargoes offered at the upper end of the overall price range are not attracting enough attention at the moment. USA origin PE with trader packaging emerge at $1120/ton for LLDPE and HDPE film and at $1080-1090/ton CFR China, September shipment. A trader said, “We only can sell a small quantity as prices are not competitive enough. There are couples of plant issues in the USA recently that limit the supply. Market therefore might head for stabilization.” Vietnamese traders also offer Indian HDPE injection at $1070/ton CFR China term this week.

In Southeast Asia, the general sentiment warm up as a number of regional and overseas suppliers announced fresh PP and PE offers for August shipment with increases. It is reported that Vietnamese buyers are very active in placing bids for PE cargoes; however, it also appears that sellers might less likely to achieve the full hike target.

A Saudi Arabia producer lifted LLDPE film prices by $60/ton from last month, reaching $1140/ton CIF Vietnam, LC AS term. A distributor offered on behalf of the producer said, “We have no HDPE film this month due to a technical glitches at the plant. Our customers are active in placing bids, yet the level is too low hence we have yet to conclude any PE cargoes for now. China demand is strong, and we think this could support the sentiment in Vietnam.”

Indeed, buyers are comparing the latest offers from Middle Easten suppliers with the availability of Thailand cargoes at relatively attractive levels. A buyer added, “Thailand LLDPE and HDPE film are now traded at $1110/ton CIF Vietnam levels and we plan to only accept deep-seas cargoes at the similar range. We are attempting to pull local market up, following the development in import ground, yet it seems difficult.”

In the PP sector, import Saudi homo-PP to Vietnam has hit the $1100/ton mark today, though deals are at discount. Vietnamese buyers remain very much passive about making replenishment, especially traders, due to lacking confident in the medium term outlook. A market source opined, “Prices would still gallop north as suppliers can now achieve satisfactory margins selling to China. Korean and Chinese suppliers have already lifted offers to $1120/ton CIF Vietnam this week.”

In contrast, buying sentiment in local Indonesia is warming up as market fear that the upcoming shutdown at Chandra Asri’s 480,000 tons/year PP line would affect local supply. A number of traders reported to have concluded a good number of deals even at higher prices. A local distributor offered homo-PP at $1150/ton FD Indonesia, cash term, up $20/ton from last week said, “The remaining cargoes at our side are very limited while demand has been signaling positive signs in recent week. Together with firming trend in the import ground, we think local market might continue to advance in the near term.” Several converters informed CommoPlast that they have stocked up additional quantity fearing that the upswing might persist.