Asia Daily PP and PE Overview 30 August 2017

In China, January delivery contract for both PP and LLDPE extended the firming trend, gaining CNY59/ton ($9/ton) and CNY35/ton ($5/ton) respectively. Both contract closed at CNY9275/ton ($1203/ton without VAT) and CNY10065/ton ($1305/ton without VAT).

Trading activities in domestic spot market hold steady thanks to strong futures values and limited availability. Another CNY50-100/ton hike ($7-15/ton) is reported on both PP and PE cargoes. Meanwhile players are expressing very positive market outlook for September.

In the import market, the firming trend continues to take place on both PP and PE offers.  Several deals for Indian homo-PP are reported at $1130/ton, LC 30 days term in Eastern China area with a buyer said, “Very few suppliers open new offer this week and we think this could continue to push market higher.” At the meantime, other players opposed that buying interest is falling as buyers resist high price levels and that could limit the upswing. In Southern China area, traders are offering the same cargoes at $1150/ton CFR, LC 30 days term though no deals are observed at this benchmark yet. “We are not having any inventories pressure and feeling completely comfortable waiting for demand to catch up,” a trader said.

HDPE injection market has been the weakest among PE grades is anot joining the firming trend too. Iranian HDPE injection sees a $10/ton increase day on day to reach deals at $1165/ton FCA China, TT in advance term. A market source commented, “Irannian suppliers are standing very firm on their cargoes as production in this country curtailed on limited ethylene supply. Some delays in PE delivery are reported. Tight supply is pulling the string this time and might elevate the current trend further.”    

In Southeast Asia, market remains very steady with suppliers continue rejecting price negotiation after achieved satisfactory sales in nearby China market. It becomes clearer that sentiment in Indonesia is weaker than others despite domestic suppliers’ constant effort in keeping prices at the high side.

Two overseas traders offered Middle Eastern BOPP at $1150-1155/ton CIF Indonesia, LC AS term this week and buyers are not showing strong interest, placing low bids even with limited quantity available. While one source decided to divert the cargoes to Vietnam, the other conceded to $10/ton discount to close deals at $1140/ton with the same term. The source added, “Indonesian buyers are very conservative. We only have a small quantity on hand at the moment and hoping to achieve better margins in the coming week.”

Meanwhile, the general purchasing activities in Vietnam is not anywhere near to satisfactory levels for suppliers; however, it does appear that buyers here are more interested in homo-PP cargoes than PE film. An international trader reportedly sold out Saudi homo-PP at $1130/ton and HDPE blow moulding at $1120/ton CIF Vietnam, LC AS term added, “We are not able to conclude any deal for HDPE and LLDPE film and therefore we plan to hold back the cargoes and wait further.”

Several Vietnamese buyers have also expressed the intention to make a small replenishment for Middle Eastern homo-PP at $1120-1130/ton CIF, LC AS term today knowing that deals for dutiable cargoes to China have reached these levels too. “We however have no interest in PE offers above the $1150/ton threshold. Our previously purchased cargoes are arriving and we prefer to wait on the side-line,” a local trader added.

A good news comes from Indonesia market is that flexible packaging converters are able to transfer higher raw material costs to end product prices, allowing buyers to accept the recent hike. Demand for HDPE film is rather steady due to limited supply, player said and couple of manufacturers are considering to stock up cargoes for December production.