Asia Daily PP and PE Overview 10 August 2017

In China, futures market is mixed toward the end of the week with September delivery contract for PP continue to firm up, adding another CNY39/ton ($6/ton) to reach CNY8825/ton ($1131/ton without VAT). In contrast, LLDPE contract loses CNY25/ton ($4/ton) to CNY9820/ton ($1258/ton without VAT).

Trading activities in domestic spot market hold steady with most offers for both PP and PE firmed up another CNY50-100/ton ($7-15/ton). Players reported seeing higher operating rate at several major converters in the flexible packaging sector. “Couple of our customers have also received better number of end product orders, though it is not significant yet, we think this is a good sign. The weather is changing and this could stimulate buying interest from the agricultural film sector.”

In the import market, players are more willing to enter deals with strengthening Chinese Yuan, which make import materials become more competitive. A trader reportedly sold Iranian HDPE film at $1140/ton CFR China, TT in advance term said, “There are still demand and looking at the tight supply condition, we think outlook for September is rather positive. Besides, we have not seen much of USA materials, which might keep market steady.”

There are also re-export LLDPE film offers from Vietnam emerges, however Chinese traders are not showing interest to bring these cargoes to mainland due to too high costs. There are market talks that these re-export cargoes being shipped to Hong Kong, where it will be transit to other markets.   

In Southeast Asia, there are very limited discussions observed in the market though players are anticipating further hike in the coming week. Vietnamese traders are becoming more active in re-exporting LLDPE film to Hong Kong as profit margins is attractive. A trader earlier this week reported to have sold some Saudi LLDPE film based on re-export term at $1150/ton to Hong Kong said, “This is a good sign and we think market just has another support for additional hike in the near term. Domestic Vietnam is weak and everyone is on the watch out for better demand condition as the traditional high demand season starts.”

Another trader said to have sold 500 tons of Saudi LLDPE film based on re-export term to Hong Kong today at $1180/ton added, “There are still more inquiries, however we are not having more cargoes at the moment. Outlook is bright and we hope that local ground could catch up.”

Meanwhile, domestic LLDPE market in Indonesia does not seem to have strong prospect, players said, as traders again cutting prices to stimulate buying interest. A number of deals are reported for local LLDPE film cargoes at IDR15,400,000/ton ($1155/ton) without VAT, FD Indonesia, cash term. A buyer commented, “This might cap the import market as buyers switch to domestic materials.”

The regional PP market steadily firm up and buyers in Vietnam and Indonesia have accepted to make purchases at above the $1100/ton threshold for dutiable origins. In fact, Indian homo-PP are transacted at $11000-1110/ton CIF Indonesia, LC AS term with the upper end represent a very small deal of one container. “Buyers are still cautious about making purchases as the question about the sustainability of the current firming trend prevail. On the other hand, the supplier is not having any sales pressure, which means prices are likely to hold firm.”

Another international supplier reported to have sold all available Saudi Arabia homo-PP cargoes at $1110/ton CIF Vietnam, LC AS term. A trader source said, “The quantity is very limited and though only couple of buyer enter deals, this is a good sign that market is gradually accepting higher prices.”