Asia Daily PP and PE Overview 22 September 2017

In China, futures market concluded the final trading day of the week on soft note, marking five consecutive sessions of falling this week. PP contract slipped another CNY10/ton ($2/ton) to reach CNY8645/ton ($1121/ton without VAT) while LLDPE contract settled at CNY9540/ton ($1237/ton without VAT), loses CNY25/ton ($4/ton) from the previous session.

There are regular trading activities in domestic spot market as converter pursue moderate replenishment before entering the holiday, however remain selective in term of prices. Local suppliers cut another CNY100/ton ($15/ton) on both PP and PE cargoes to smoothen sales process. Various discounts have been introduced in an effort for local producers to deplete inventories. “There is an estimated accumulation of more than 200,000 tons of inventories at major local producers throughout the holidays. It is safer to keep the warehouse available, especially when demand is still presence. More price cuts would emerge in the coming week,” a buyer expressed the expectation.

Meanwhile, domestic producers are expressing the intention to offers homo-PP cargoes to export market again if local prices continue to slide in the coming weeks. “However, it also depending on the price acceptance among overseas buyers, especially in Southeast Asia. We are monitoring the situation and started offering a small quantity to Vietnam for testing,” a coal based PP producer said.

In the import market, PE prices at the upper end of the overall range continue to face resistance, forcing supplier to step back on the offers. The lower end, on the other hand, holds relatively stable. “Overseas supply is still tight, especially from Iran. This is expected to keep the market from any further deterioration. We continue to hope for a pick up in demand in the near term,” an international trader said.           

In Southeast Asia, it seems that buyers are slowly accepting higher price levels from overseas makers as more October shipment offers are being announced with hike. The influence of weakening China market has not come as quickly as expected

A major Saudi Arabia producer announce new HDPE and LLDPE film offers to Vietnam earlier this week at $1240-1250/ton CIF, LC AS term reported to have sold out the available quantity to this market after conceded to $20-30/ton discount from initial offer. A distributor source informed, “Buyers were very reluctant at first, and become more open about making purchases after the discounts. We only have a small quantity to Vietnam this round, hence managed to sell out very quickly. There are some price corrections in China at the moment, yet buyers there still need cargoes. As a result, we are quite positive about the near term outlook.”

Another Saudi Arabia producer has also lifted October shipment offers for both PP and PE to Indonesia and Vietnam by $40-60/ton month on month. The producer is not having comfortable allocation to export market this round given the recent shutdown at one of the PP and PE lines. A source close to the producer informed, “We believed that demand in China would hold steady in the coming days as well as the post-holiday term due to the start of the traditional agricultural season. We might offer a small discount on deals, however there is no plan to sell PE cargoes below the $1200/ton mark.”

The regional PP market remains unaffected by the recent downtrend in the nearby China market. Middle Eastern suppliers show no intention to cut prices despite the persistent sluggish demand condition across the region. A trader offers various homo-PP cargoes for Saudi Arabia origin to Vietnam at $1180/ton CIF, LC AS term reported, “Buyers are placing bids are $20/ton lower, however we are not able to accept at the moment. Supply is tight and we are monitoring further development in China before making any decision.”

Buyers in Indonesia are adopting the conservative stance of wait and see too. As reported earlier, most woven bags converters are facing difficulties in transferring higher raw material costs to end product prices, bottlenecking the purchasing activities in the country.