Asia Daily PP and PE Overview 23 August 2017

In China, futures market remains firm though the range of increment is smaller. PP contract gained CNY98/ton ($15/ton) to reach CNY9091/ton ($1165/ton without VAT). LLDPE contract inched CNY50/ton ($7/ton) higher, at CNY9945/ton ($1274/ton without VAT).

Demand in domestic spot market is healthy with converters are returning to make replenishment. The condition is expected to be better in the near term since medium to large scale converters are absorbing end product orders from those whom have shutdown due to violating environmental regulation. A BOPP sheet maker added, “Besides, we have also been able to increase end product prices by CNY1000/ton ($150/ton) since end of July. And therefore, we feel more confident to stock up additional material.”

In the import market, offers for PE extended the firming trend and some traders are testing buyers respond by offering Saudi Arabia LLDPE film at $1200/ton CFR China, LC AS term. No deals have been reported at this level. Meanwhile Thailand HDPE film is sold at $1195-1200/ton CFR China, LC AS term. A trader said, “Supply for LLDPE and HDPE film is very tight, which pushes offers higher day by day. Compare to other grades, LDPE film market is not as strong, and yet with delay shipment from Iran, sellers might decide to hold firm stance on the cargoes.”

Indian homo-PP offers has reached $1140/ton CFR China – a $40/ton increased from yesterday. “We have not been able to close deals after the adjustment. However, with no inventories pressure and high potential of continued firming futures market, we are willing to wait for demand,” a trader said.   

In Southeast Asia, market remains on the firming track as overseas suppliers attempt to implement further hike following escalating China demand. Supply for both PP and PE across the region is becoming tighter and therefore, it appears that buyers are gradually accepting the hike.

In fact, an Indian producer reportedly withdrew import homo-PP offers to Vietnam after achieved satisfactory sales in China, only to re-open fresh prices later at $20/ton higher to Vietnam, reaching $1150/ton CIF, LC AS term. However, the supplier is unable to achieve full hike with deals reported at $1130/ton with the same term. A Vietnamese buyer said, “Limited supply and better sentiment in China would encourage Southeast Asian players to accept higher prices. The firming trend could sustain throughout first half of September.”

Meanwhile, several Southeast Asian producers including Vietnamese, Philippines and Malaysian have lifted import homo-PP offers to Indonesia amid tightening regional supply. Philippines homo-PP witnesses relatively large hike week on week, adding $40/ton to $1210/ton CIF Indonesia, LC AS term. A trader source added, “Many of our customers are placing price inquiries and we are not having large quantity on hand at the moment.”

Southeast Asian homo-PP supply might remain tight in the coming weeks with Thailand’s SCG unexpectedly shutdown one of its PP lines during the weekend due to electricity issues. The unit might remain off-line until end September. Meanwhile, HMC is working to stabilize production after completing three weeks maintenance shutdown since late July.

In the PE market, more Middle Eastern suppliers announced September shipment offers with increases month on month. Latest price list from a major Saudi Arabia producer indicated $60/ton higher for HDPE film and $30/ton for LLDPE film. A market source said, “Prices increased too fast and we are unable to accept this level at the moment. We plan to place bids at below $1150/ton for both HDPE and LLDPE film even the supplier has limited quantity.” Deals for LLDPE film from another Saudi Arabia producer have also been concluded at $1130-1140/ton CIF Vietnam, LC AS term.

Local PE market in Indonesia has also picked up considerably as another domestic producer announced reducing contract fulfillment by 10%. As a result, many traders are holding back on their available cargoes believing that further price hike become inevitable. “Sales for LLDPE film is very good and we prefer to hold back some quantity since supply is very tight in local ground,” a trader said.