Asia Daily PP and PE Overview 5 September 2017

In China, the two weeks rally in futures market ended today with contract number 1801 for both PP and LLDPE settled on stable to softer notes. The number of transaction has also dropped visibly. PP futures edged CNY71/ton ($11/ton) lower to CNY9610/ton ($1256/ton without VAT) while LLDPE contract unchanged at CNY10440/ton ($1364/ton without VAT).

Spot trading in China is rather “hot” as international suppliers continue to accelerate the firming trend, pushing import offers for PE to above the $1200/ton threshold. Import PE from Thailand even hit above the $1300/ton mark, based on CFR China, LC AS term reaching $1290-1320/ton for HDPE film and $1380/ton for LLDPE film. As a rectification, the mentioned LLDPE c4 film price is not an error. A distributor commented, “Our principal supplier shows no intention to loose their stance on the offered cargoes claiming limited supply. Buyers are shock with the latest price list and might need couple of day to adjust the acceptance levels. However, thanks to continuous surging futures contract, these import offers are still relatively competitive.”

Philippines HDPE film also witness an upward adjustment of $60/ton day on day, touching the $1250/ton mark, based on CFR China term. Explaining to the adjustment, players pointed to the good respond received in the previous trading day and it now becomes common that import HDPE film to China is now above the $1200/ton threshold. “Import offers seems rolling on a high speed coaster in recent days, however, we think that surging domestic ground would cushion the import trend.” 

The overall supply for PE might remain tight in the near term, players said pointing to the fact that not only several USA producers are shutdown because of the recent cyclone but also most Iranian plants are running at low rate due to lack of ethylene supply. 

In Southeast Asia, there are very limited new offers from overseas suppliers as most cargoes are diverted to China for better netback. Indonesian and Vietnamese buyers started showing the eager to make additional purchases worrying that supply would dry up in the near term.

There is almost a panic situation in domestic Vietnam market today as traders lifted local offers several times in light of better re-export opportunities to China. “We have to accept $25/ton hike within a day for locally held Saudi Arabia LLDPE film cargoes as traders are holding back on the quantity. China market is magnetizing all the materials, which might lead to serious drying supply in Vietnam. We need to stock up some quantity within this week.”

Vietnamese traders are highly attracted to the great netback that China market offers at the moment, from which more re-export cargoes emerge this week. Today, Chinese players receive a re-export offer for HDPE only from a Vietnamese seller for about 575 tons of blow molding and 800 tons of film grades at the price range $1215-1260/ton CFR China main port, LC 90 days term. This therefore makes sense about the concern facing buyers in this market.

Meanwhile, import PP market sees minimal number of new prices, mostly at higher levels week on week. A regional trader offered import homo-PP to Indonesia at $1240/ton for Vietnamese origin and $1170/ton for Kuwait origin, all based on CIF, LC AS term. “Customers are still reluctant to accept the hike, however this trend is expected to persist in the coming weeks. We are holding firm on the available quantity and willing to wait for demand to catch up.”

There is no import offers for homo-PP reported in Vietnam though buyers are very concern about the continuous price increment. “We are watching out for new offers and might need to make replenishment soon. Market seems to have additional room to move higher. At the meantime, we think that prices could be stabilized by mid October, in line with the built up resistance,” a converter commented.