Asia Daily PP and PE Overview 18 September 2017

In China, futures market regains some strength after several falling sessions. January delivery contract for PP gained CNY25/ton ($4/ton) to reach CNY8913/ton ($1163/ton without VAT). Meanwhile, LLDPE contract increase CNY35/ton ($5/ton) to close at CNY9790/ton ($1277/ton without VAT).

Trading activities in domestic spot market has yet to revive, however, there is a strong hope that pre-holiday replenishment activities would be strong. To attract buyers back to the market, traders are offering another CNY100/ton ($15/ton) discount on both spot PP and PE cargoes. “Large scale converters are operating at full rate with good end product businesses thanks to the shutdown of unqualified plants recently. We believed that restocking is very necessary and buyers are just waiting for the right prices,” a trader commented.

Not only converters, but also a number of traders – who have depleted most of the inventories over the past weeks and currently side-lining to wait for better prices. A trader added, “We only have left a small quantity on hand and might need to replenish some cargoes soon. We think that USA suppliers might be absence in the coming months, which would keep supply tight and prevent market from any drastic slide. Outlook for October seems positive with the heavy preparation for Mid-Autumn Festival and Single Day Sales.”

There are very limited new offers in the import market, though there is a good sign that buyers are sending in price inquiries. “We really hope to see better purchasing activities within these two weeks,” a trader, whose offers stand at $1310/ton for Taiwanese HDPE film. “However, in order to conclude deals, we must concede to some discount, following the recent trend in local ground,” the source added.

In Southeast Asia, market is loosening. Regional buyers have been showing stiff and persistent resistance towards the rapid price increment over the past weeks and couple of overseas suppliers started to lower offers to entice sales.

Vietnamese players on the first trading day of the week reported to have received fresh offers from a major Saudi Arabia producer at $20/ton lower from last week, reaching $1210/ton for LLDPE film and $1180/ton for BOPP, all based on CIF Vietnam, LC AS term, LDS 15 October. A distributor offered on behalf of the producer informed that these cargoes were initially scheduled for China, however, demand here slow down in recent days, forcing the maker to re-direct to Vietnam. The source added, “The quantity is not too big and we believed that with the current ethylene costs, it is unlikely that import PE could go through drastic downtrend.”

However, Vietnamese buyers are becoming even more cautious and prefer to stay on the side-line until outlook become clearer. Also contributed to such condition is the large price gap between traders and producer. For instant, official price list for LLDPE film given by an Indian producer is about $110/ton above trader’s offers for the exactly same cargoes. This has illuminated the possibility that market is facing a price correction. Local offers for PE in Vietnam witness VND300,000/ton ($13/ton) week on week.

In Indonesia, domestic offers for LLDPE and HDPE film from a major local producer have surged $220-230/ton since mid July and many HDPE bags converters are turning to recycle material to protect margins. As buyers resisted and turned away from high price prime cargoes, traders find it difficult to follow the hike introduced by local producers and many decided to maintain offers unchanged to entice buying interest. “We are not planning to follow the hike. Local demand is diminishing and we plan to deplete more cargoes this week,” a source said.

The regional PP market remains on the stable to firm track though deals concluded are very few. Import offers at $1200/ton and above for dutiable origin hold unattractive position, “And therefore we maintain offers for Middle Eastern cargoes at $1180-1190/ton CIF Vietnam. Yet the numbers of deals are disappointed, especially when China market is showing signs of slowing down,” an international trader said.