Asia Daily PP and PE Overview 14 August 2017

In China, new contract get started at soft note for two consecutive sessions. January 2018 delivery contract for PP losses another CNY42/ton ($6/ton) to reach CNY8677/ton ($1114/ton without VAT). LLDPE futures edged CNY80/ton ($12/ton) lower at CNY9545/ton ($1225/ton without VAT).

Two consecutive sessions of falling futures market take a minor hit on spot trading activities. PP and PE in domestic ground fall CNY50-100/ton ($7-14/ton) as buying interest weaken significantly. A trader said, “Sales are slower but we believed that this is not anything too major. Preparation for the Single Day is on its way and therefore demand shall revive soon.” Besides, supply for HDPE film, blow moulding and yarn and LLDPE film is rather tight, which provide additional support for prices, the source added.

In the import market, dutiable homo-PP cargoes are standing at $1060-1090/ton CFR China, LC 0-90 days term with very few real transactions observed. Sellers are not showing hesitation to implement further hike in spite of the lack of buying interest. An international trader expressed sell idea for Saudi Arabia homo-PP yarn at $1120/ton CFR China, LC AS term said, “Buyers are not responding very positively toward the idea price levels and we are monitoring further before taking any action.”  

In Southeast Asia, there are not many international supplier announce new offers on the first trading day of the week, as players are taking time to evaluate the impact of recent hike in ethylene costs. Tight supply pushed ethylene based on CFR Northeast Asia up $85/ton last Friday, reaching $1200/ton threshold for the first time since early May this year.

An international has been attempting to keep Middle Eastern HDPE and LLDPE film at $1150/ton CIF Vietnam, LC AS term said, “Our customers are not showing interest. Domestic ground is still very sluggish with minor price increment, which does not stimulate any demand for import material despite strong ethylene costs.” Vietnamese traders are still active in re-exporting Saudi Arabia LLDPE film cargoes to China, though prices are at relatively stable levels from last week.

Meanwhile, in Indonesia, both local producers lifted PE prices following the international trend. Players here are expecting a gradual tightening domestic supply in the near term as surging ethylene costs might forced non-integrated producer to reduce operating rate to protect profit margins. “This is especially when downstream market does not provide strong support for further, making it uneconomically to produce PE. We are considering the option of adjusting run rate,” a producer said.

Regional PP market appears to be quieter amid limited number of new offers from regional and international sellers. At the meantime, prices below the $1100/ton threshold are gradually disappearing. A trader offer Saudi homo-PP at $1120/ton CIF Vietnam said, “We have not been able to conclude any deals at the latest price. Market might need a little longer time to accept the trend and we are confident about the near term outlook.”

Non-dutiable homo-PP offered to Indonesia remains in the range $1160-1170/ton CIF, LC AS term, though buyers are still very much cautious. “And we are not in hurry to make adjustment given the current supply condition,” a regional trader said. The tug of war is expected to persist and only when end product businesses pick up, prices could move up in higher pace, players said.