Asia Daily PP and PE Overview 15 August 2017

In China, futures trading remains on the soft side as market are on transition period. January 2018 delivery contract for PP sled another CNY164/ton ($25/ton) to close at CNY8541/ton ($1094/ton without VAT). LLDPE contract also fell CNY120/ton ($18/ton) reaching CNY9450/ton ($1211/ton without VAT).

Falling futures market has taken out arbitrage traders, putting spot market into a weaker position. Both PP and PE edged CNY50-100/ton ($7-14/) lower from yesterday. A good sign is converters are still stocking up material ahead of the traditional high season, which limits the fall in spot prices. A trader informed, “We still manage to sell cargoes to our manufacturing customers, though most of them only purchase one or two containers. The minor price correction in these few days is keeping converters in the market and this is important.”

In the import market, it is reported that deals for Saudi Arabia homo-PP are concluded at $1010/ton CFR China, LC AS term to converters, some $70/ton below initial price list given yesterday. This level is below domestic prices (when no duties and cargoes clearance costs are taken into account), and carries a big potential to jeopardise other maker’s effort in lifting prices. “We hope this is just a correction and that market would return on the firming track soon,” a trader said. Other suppliers are holding prices at the range $1070-1120/ton CFR China, LC 0-90 days term.

Supply for Qatari PE cargoes is still limited in the market, allowing prices to firm up additional $5-10/ton from last week, reaching $1150/ton for LLDPE film and $1220/ton for LDPE film, CFR China, LC 60 days. Traders are selling these cargoes at $10-15/ton above the price list in open market.       

In Southeast Asia, market remains on the stable to firmer trend though the number of actual transaction is sloppy. It becomes uncertain if import homo-PP to the region could firm up any further with the current resistance built up through out the market.

Saudi Arabia homo-PP cargoes are concluded at $1110/ton CIF Indonesia, LC AS term with a trader sold the cargoes on behalf of the producer said, “We only have a small quantity while our customers are not very esteem about making replenishment at the current prices despite firmer local ground.”

Domestic suppliers in Indonesia implement another $10/ton increased after announcing fresh weekly offers at higher levels just a day ago. In the distribution market, homo-PP yarn has reached $1210/ton FD Indonesia, cash term. “And buyers are asking to make purchases at previous levels of $1170-1180/ton with the same term. We might need more time to achieve the full hike,” a trader said. 

The sentiment in Vietnam is sluggish and similarly, there has not been many deals concluded in recent days as suppliers take firm stance on the cargoes. A converter making household product said, “We have comfortable stock until October and we prefer to wait on the sideline at the moment. Buyers are resisting higher prices while propylene is just stable, which might hurdle any drastic upward movement in the near term.”

The regional PE market appears to be in better position considering the recent upswing in ethylene costs. A number of producers have or planning to implement hike on September delivery cargoes in an attempt to protect profit margins. Thailand HDPE and LLDPE film are offered at $‎1170-1180/ton CIF Vietnam, LC AS term, which is approximate $40/ton higher than initial offers given earlier last week. A trader offered the cargoes on behalf of the producer said, “Our customers are placing bids at $1140/ton and we need to consider this level since this is below the current ethylene prices. Demand is not very strong though we think market has no other choice but to accept higher price levels.”

Meanwhile, another Southeast Asian maker is also planning a $60/ton increment on LDPE cargoes for September delivery with a distributor said, “Our regular customers are still placing order in preparation for the year end season. Besides the upstream costs, our principal supplier is not having sales pressure.”