Asia Daily PP and PE Overview 8 September 2017

In China, futures market closed the final trading day of the week on soft notes, marking three consecutive falling sessions. Both PP and LLDPE contracts for January delivery fell CNY135-137/ton ($21/ton) to reach CNY9243/ton ($1225/ton without VAT) and CNY10075/ton ($1335/ton without VAT) respectively. 

Trading activities in domestic spot market slow down visibly and traders slashed offers for both PP and PE by CNY100/ton ($15/ton) day on day to smoothen sales. Results are disappointed as buyers expected market has reached the peak and might encounter minor correction in the near term. “We have comfortable inventory and current waiting on the side-line. The recent speedy escalating in prices bumped into stiff resistance and we think there shall be some downward adjustments soon,” a converter said.

Meanwhile, most traders have reportedly depleted most of the cargoes on hand and also waiting for the right prices to make replenishment. “Apparently, import offers for PE at $1300/ton and homo-PP at $1200/ton are not attracting any buying interest. Most deals are at $40/ton below these levels. Besides, futures market is falling after two consecutive weeks of surging, and if this condition persist, buying interest might continue to perish,” a trader said.

Slower purchasing activities caused total PP and PE inventories at domestic major producers’ warehouses surge nearly 2% in just one day, reaching approximate 625,000 tons.  

In Southeast Asia, prices are steadily firming up despite weakened sentiment in the nearby China market. More international suppliers, including those dutiable origins, lifted offers for homo-PP to Vietnam to $1200/ton mark, though the numbers of deals are still limited.

A buyer received offers from several Saudi Arabia producers for homo-PP at $1200/ton CIF Vietnam, LC AS term said, “While prices are moving higher, we also notice that more suppliers are returning to the market today. We placed bids at $1160-1170/ton to take additional quantity and currently waiting for confirmation.”

Domestic trading activities in Vietnam have not shown any drastic improvement, however prices remain relatively firm, which encourage traders to restock additional quantity believing that tight supply would keep the market firmer for longer. “Import homo-PP availability, especially from Middle East, has not been comfortable since beginning of the year thanks to the emerge of several new and potential markets. Such tightness is expected to draw buyers back, accepting the recent hike,” a regional trader commented.

In the PE sector, a major domestic supplier in Indonesia concluded the final trading day of the week with the third hike on LLDPE film in a week. Buyers apparently are panic buying, worrying that local offers might continue to firm up in the coming week. Data combined by CommoPlast on changes in official price list by one of the major domestic producers showed that compared to mid July, local HDPE and LLDPE film has jumped $180-190/ton. Tight supply is the primary factor contributing to such rapid movement, players said. In addition, HDPE bags manufacturers have been able to transfer the higher costs to end product prices, reinforce the confident to procure additional quantity. The biggest question players are asking now is that how long would this trend sustain? Many are expecting market to be more of stabilized in the coming week considering healthy gap between ethylene and PE, while most buyers are stocked up much of the needed quantity. “Contract prices are set to firm up as it has been low for too long. At the current spot market level, we think it is hard for prices to move much higher.”

Meanwhile, buying interest within Philippines is not strong at the time preparation for year-end festive season should be in place. “Most converters are having comfortable inventories at the moment, in which many refused to take additional quantity at the current high prices. Our regular buyers are planning to only restock by beginning of October, hoping that market would be softer at that time due to the absence of Chinese customers.”