Asia Daily PP and PE Overview 21 August 2017

In China, futures market extended the firming trend, adding CNY141/ton ($21/ton) on January delivery contract for PP, closing at CNY8957/ton ($1148/ton without VAT). LLDPE contract also increased CNY110/ton ($16/ton) to reach CNY9805/ton ($1256/ton without VAT).

With support from healthy futures trading and lack of inventories pressure, local supplier implemented CNY200/ton ($30/ton) hike on spot homo-PP cargoes while PE prices only gain CNY50-100/ton ($7-14/ton) day on day. Customers are actively asking for new offers though the number of deals concluded is rather mediocre. Demand condition might improve further in the near to medium term as the government has taken steps to streamline the environmental inspection process, reducing the overall procedure to 10 days for manufacturers to obtain operating permit.

In the import market, the lower end of the overall import homo-PP price range has not repeated, leaving offers at the level of $1080-1130/ton CFR China, LC AS term. “The location gap between China and Southeast Asia is getting narrower. Local market continues to move higher, however remain more competitive than import materials at the moment. We are not seeing much supply in the market and this would hold price firm.”

Traders are attempting to implement small increment on import HDPE cargoes to China this week following the ethylene costs, and bumped into stiff market resistance. Buyers might need more time to accept higher price levels if upstream costs sustain the current levels in the coming weeks.         

In Southeast Asia, there are very limited transaction observed on the first trading day of the week mostly due to the lack of new offers from international suppliers. Meanwhile, regional buyers are becoming more cautious about making replenishment, though anticipation of further price hike, especially on PE, is strong.

A Vietnamese trader reported receiving bids from Chinese buyers on re-export Saudi Arabia LLDPE film at $1140/ton CFR China, LC AS term said, “Buying interest seems weaker this week as customers are more aggressive in placing lower bids. We have sold considerable quantity in the previous week, therefore we might keep the remaining quantity for domestic ground.”

Other international suppliers are very firm on the offers claiming lack of availability and high ethylene costs. Thailand HDPE blow molding offered at $1190-1195/ton CIF Vietnam, LC AS term after a long period of absence. Acceptance among buyers toward the latest offers remains very low and few are interested to place bids, pointing to weak local ground.

At the meantime, a major Saudi Arabia producer lifted September shipment offers for PE to Vietnam by $30/ton from last month, reaching $1140/ton for HDPE film and $‎1150-1160/ton for LLDPE film, all based on CIF Vietnam, LC AS term. Buyers have yet to respond to new prices, however it seems that the supplier is attempting to win back some of the previously discontinued customers, and thus market is expecting special discount to emerge. A buyer said, “We place bid at $1120/ton for the lower grade of LLDPE film and currently waiting for feedback. Ethylene surged drastically, however downstream demand is not giving sufficient support. The firming trend might loose momentum if ethylene face correction.”

In related Plant Status news, Thailand’s SCG was forced to take one HDPE line and one PP line off-stream during the weekend due to electricity supply issues. Both units might remain off-line until end of September, which inevitably affected the supply condition, especially HDPE blow molding and homo-PP injection grade.

The regional PP market is quieter with very few offers available at stable levels from last week. A regional trader sold Vietnamese homo-PP at $1170/ton to Indonesia while holding Middle Eastern cargoes at $1100/ton, CIF Indonesia, LC AS term. A trader source informed, “Buyers are becoming cautious, especially those using yarn grade, taking smaller quantity than usual. Demand for Middle Eastern material seems to be weaker than non-dutiable grades, however we continue to look at stable to firmer trend in the coming days.”

Transaction for import PP block copolymer in Indonesia is also limited given large price gap between buy and sell ideas. South Korean PP block are offered at $1190-1200/ton CIF Indonesia, LC AS term, yet buyers are placing bids at $40-50/ton lower.