Asia Daily PP and PE Overview 9 August 2017

In China, futures market hold firm for the second session straight ahead of the contract transition. September delivery contract for PP gained CNY110/ton ($16/ton) to reach CNY8779/ton ($1122/ton without VAT). LLDPE contract added CNY80/ton ($12/ton) at CNY9805/ton ($1253/ton without VAT).

Trading activities in domestic spot market has not shown much changes and suppliers lifted offers for both PP and LLDPE by additional CNY50-150/ton ($7-22/ton) from the previous session. Concern is turning heavier with the fourth round of environmental inspection taking place in Jilin, Zhejiang, Shandong, Hainan, Sichuan, Tibet, Qinghai, Hainan, Xinjiang lasting about one month. This is expected to affect the general demand condition. “Our customers are still placing small orders to meet immediate need, hence it is important to monitor the possible impact further,” a trader said.

In the import market, major Thailand producer announced fresh PE offers at $10-20/ton higher, reaching $1170/ton for HDPE film, $1175/ton for LLDPE film and at $1230/ton for LDPE film, all based on CFR China, LC AS term. A trader informed, “Our supplier emphasized that their supply is very limited, especially LLDPE as some buyers didn’t managed to receive offers for LLDPE this round. We believed that with overall tight supply situation of imported cargoes to China market, there are still deals able to be concluded with such high price level.”

There are also re-export Saudi LLDPE film from Vietnam to China concluded this week at $1150/ton CFR, LC AS term with several Vietnamese traders reportedly received purchased inquiries for re-export LLDPE film.    

In Southeast Asia, market is steady as the week proceeds and in spite of stiff resistance from buyers across the region, suppliers vow to continue maintaining firm stance on the cargoes. A major Saudi Arabia producer announced fresh offers for homo-PP to Vietnam and Indonesia at $1110-1120/ton CIF, LC AS term. An international trader said, “We have not been able to conclude any deal to Vietnam at the latest prices. Demand is weaker than we expected and yet, we are planning to implement further hike in the coming week.”

Another trader selling to Indonesia added, “Most buyers are requesting for last week’s prices at $1080/ton CIF term and we are not able to meet the bids as market is significantly firmer now. We might only be able to offer a small discount for serious buyers.”

Other regional suppliers also started to take firmer stance on their cargoes anticipating continued firming trend in the coming week. A trader insist on the price level of $1170/ton CIF Indonesia for Vietnamese homo-PP, though a good number of buyers placed bids at $30/ton lower. The source said, “Supply is very tight since the plant just restarted from nearly two months maintenance shutdown. We are not able to concede to any discount at the moment.”

The regional PE market appears to be softer with couple of sellers stepping back on the initially hike as market resistance built up. Iranian HDPE film and LDPE film were offered at $1140/ton and $1240/ton respectively earlier this week with the supplier refused to enter any price negotiation. Such stance is softer today and buyers reportedly received $20/ton discount for both grades. A local trader said, “We did not purchase any additional cargoes since domestic ground remains very weak. Besides, we are having comfortable inventories, hence we might just wait and see at the moment.”

Market is strangely quiet in spite of various factors that possibly pushes price up in the coming weeks, including tightened supply, improved demand condition in near-by China market and strong upstream costs. Buyers are just very conservative about procuring fresh cargoes hoping to see clearer sign of demand in China before taking position.