Asia Daily PP and PE Overview 8 August 2017

In China, futures market revived, adding CNY132/ton ($20/ton) to PP contract for September delivery, reaching CNY8486/ton ($1083/ton without VAT). LLDPE contract closed CNY120/ton ($18/ton) higher, at CNY9575/ton ($1221/ton without VAT).

Domestic spot market continues to firm up, adding CNY50-100/ton ($7-15/ton) to both PP and PE offers. Most traders still complained about mediocre demand condition and that buyers only source materials hand to mouth basis. However, buying interest is improving as autumn starts, which marks the beginning of the agricultural film season. Outlook for August and September is expected to be firm, players said.

A BOPP converter in Zhejiang added, “So far we have not been able to transfer higher raw material prices to end products. And we prefer to be conservative as another round of environmental inspection would take place in Zhejiang area starting 10 August, where small enterprises conprise of nearly 50% of the total number of companies. Demand is likely to be affected.”

Import PE to China continues to move higher by $5-10/ton week on week with Qatar material reaching $1195/ton for LDPE film and at $1145/ton for LLDPE film, CFR China, LC AS term. “It is hard to attract sales at higher prices, however Qatari materials are very limited at the moment due to shipping and plant issues. We hope buyers could slowly accept the trend with the start of the agricultural film season.”   

In Southeast Asia, the general sentiment remains firm though very few supplier opens new offers today. Strong upstream costs continue to open path for market to move higher in the near term, players said, yet acceptability among buyers is moving in the opposite direction.

A Vietnamese buyer received offers for Korean HDPE and LLDPE film at $1185-1190/ton, CIF Vietnam, LC AS term said, “We think this could be the peak level as market is not accepting prices above the $1150/ton at the moment. We have not seen any strong pick up in demand in local market and we hope that market condition would improve in the coming weeks, following the school re-opening season.”

Other international suppliers have also expressed the intention to implement further hike for September shipment, which to be announced by third and fourth week of tis month. A Saudi Arabia maker added, “We are confident about the outlook in September though Southeast Asian buyers are a little reluctant at the moment. Steady demand in China, strong upstream costs and the festive season would give market sufficient support to move higher.”

Import homo-PP from Middle East remains above the $1100/tom threshold in Vietnam and the number of deals are very limited. Many buyers are not confident to enter deals at such high levels seeing deals concluded in near-by Indonesia market remain below the benchmark. A local trader received offers for Saudi homo-PP at $1120/ton CIF Vietnam, LC AS term added, “It is still unclear if healthy buying interest in China could sustain and we are monitoring very closely the condition at the moment. At the meantime, local market is slow, hence we prefer to be cautious.”

A number of medium to large-scale converters in Vietnam claimed to have comfortable stock for the next two to three months. This might lead to a risk that demand might remain flat as prices extend the journey north. A household product converter said, “We have been on the sideline for couple of week and might continue to do so in the near term. Prices are too high now, it is too risky to make fresh replenishment.”