Asia Daily PP and PE Overview 1 August 2017

In China, futures market regains the momentum after three consecutive loosing sessions. September delivery contract for PP added CNY146/ton ($22/ton) to reach CNY8339/ton ($1061/ton without VAT). LLDPE contract gained CNY80/ton ($12/ton) to close at CNY9500/ton ($1215/ton without VAT).

Domestic spot market opens new month on firm notes and with futures trading revived from technical correction in the previous days, arbitrage traders emerge again to leverage the price gap between the two markets. A trader said, “Converters are not active as the recent environmental inspection affected the confident in keeping stock. However, we are confident that buying interest toward the end of the year shall improve due to the festive season.”

In the import market, several deals for LDPE film originated from Thailand and Qatar are closed at $1200/ton CFR China, LC AS term, which surprised the market. Other Iranian and Saudi Arabia LDPE film cargoes are still ranging at $1170-1085/ton with the same term. Such acceptance is attributed to the fact that supply for Thailand and Qatari materials are limited at the moment.

Another trader increase offers for Saudi HDPE and LLDPE film by $10-20/ton from last week, reaching 1160/ton and $1140/ton respectively, CFR China, LC AS term said, “Sales for HDPE film is better than LLDPE film. We are holding back on the parcels hoping to achieve better margin in the coming days.”           

In Southeast Asia, the general sentiment is steady in the most local markets yet import ground continues to witness the firming trend. Overseas sellers are lifting import homo-PP prices to Indonesia, and prices below the $1100/ton threshold are slowly disappearing from the market. An international trader sold Saudi homo-PP yarn at $1080/ton, CIF Indonesia said, “We have sold all available quantity without any discount earlier this week. More allocation shall only come next week, however, likely to be at higher levels.” Most offers for Southeast Asian origin cargoes also edge higher today.

Meanwhile, domestic market is cooling down after a brief panic replenishment that fuel a strong rebound over the past week. A number of converters reported to have secured sufficient inventories and might withdraw to the sideline to monitor further development. A trader offer local homo-PP yarn at $1170-1180/ton FD Indonesia, cash term said, “Sales are slower today though we do expect market to remain firm in the near term as sellers are not facing any inventories pressure. The traditional high demand season is just around the corner and we hope this could give market more stamina to advance further.”

Vietnamese buyers are slowly accepting higher import homo-PP prices, jut yet the number of deals are rather limited. It is heard that South Korean homo-PP yarn are sold at $1120/ton CIF Vietnam, LC AS term, which is about $30/ton below initial offers. “We have comfortable stock on hand from previous purchases at lower levels, hence we are not planning to replenish at current prices,” a converter said.

The regional PE market is steady; however with deals for import LDPE film to China concluded at the $1200/ton mark, it is likely that offers to Southeast Asia might witness continued upward movement. A major Southeast Asian producer withdraw August shipment offer for LDPE film to the region with a distributor added, “We requested for additional quantity, however our principal supplier is unable to supply. Feedstocks are firming up and September demand would be stronger due to year-end order preparation, which means market has more support to be firm.”

A Saudi Arabia producer also conceded to $20/ton discount on import LLDPE film to Vietnam after rejecting all price negotiation in the previous week. Deals for this cargo are reported at $1120/ton CIF Vietnam, LC AS term. “We have sold out most of the quantity by now and we hope this could boost local sentiment in the coming days,” a trader said.