Asia Daily PP and PE Overview 28 September 2017

In China, futures market plunged 2.2 - 2.5% as the holiday draws near. January delivery contract for both PP and LLDPE fell CNY210-220/ton ($32-33/ton) to close at CNY8661/ton ($1111/ton without VAT) and CNY9450/ton ($1213/ton without VAT) respectively.

Domestic spot market is entering the holiday mood. Buyers are still placing orders for post holiday delivery; however, the number of deals has fallen considerably compared to earlier this week. Offers for both PP and LLDPE inched CNY50-100/ton ($8-15/ton) lower from the previous day. A trader informed, “We manage to deplete another 2000 tons of homo-PP today but not even 100 tons of PE. Most parcels are for delivery by the second week of October as it is difficult to arrange any logistic at the moment. Buyers are completing all replenishment activities and market shall be slower by the week’s end.”

It is reported that total PP and PE inventories at major local producers’ warehouses digested another 30,000 tons from the previous day, to 620,000 tons as of today. Thanks to healthy sales result this week, local producers might not face any serious inventories pressure in the post holiday term, creating a bright prospect for the market. This is also supported by the fact that many converters are having shorter than normal on hand inventories, leading to a strong speculation that post-holiday demand condition would be satisfactory.

Import market meanwhile sees little movement and Saudi Arabia homo-PP cargoes at $1110/ton CFR China, LC AS term remains existing in the market. “There are very limited offers in the import market. Suppliers are attempting to keep prices stable though buyers are not showing strong interest in deep-seas cargoes. Near term outlook for import ground is rather cloudy,” a market source commented.

In Southeast Asia, the general sentiment is steady and though buyers are very cautious about making replenishment, there are still a moderate number of deals reported for import homo-PP cargoes as suppliers agreed to small discounts.

Several deals for Saudi Arabia homo-PP are observed in Vietnam at $1170/ton CIF, LC AS term, which is $10/ton softer for the same cargoes compared to last week. “Suppliers are very reluctant to concede to large discounts due to limited availability. In the coming weeks, we are not seeing any opportunities that prices could fall below the $1150/ton threshold for dutiable origins,” a buyer commented.

Deals for Singaporean and Thailand homo-PP yarn are also reported at $1205/ton CIF Vietnam, LC AS term. “We have sold 200 tons cargoes with only $5/ton discount from initial offers. Demand is not strong, however buyers have accepted the fact that market is unlikely to face drastic correction given the tight supply condition,” an international trader, whose offers for Singaporean homo-PP at $1210/ton.

In contrast, the regional PE market is on a tug of war between tight availability from overseas suppliers and extremely cautious buyers, who are expecting a correction in ethylene market soon. “Ethylene market is at its peak and might come down anytime and when this take place, it is likely that the downstream PE market would be affected. We are negotiating with Saudi Arabia producer to close deal at below $1200/ton for LLDPE film cargoes,” a buyer said.

International traders and distributor are reporting similar situation and very few deals are achieved at prices above the $1200/ton mark. Indian LLDPE film cargoes started emerging in Vietnam at $1185/ton, CIF, LC AS term today, which is far below the official offer given earlier this month. A trader explained, “These are old parcels and the quantity is not very large. Market is too sluggish and we need to have some measures to encourage buying interest.” It does appear that HDPE film is having stronger position in Vietnam than LLDPE film.

In related Plant Status news, Saudi’s PetroRabigh is planning a maintenance shutdown schedule at its PP and PE plant by early October. Unit to be taken off-stream including the 600,000 tons/year LLDPE line and the 350,000 tons/year homo-PP line. Both units are set to remain offline for 20 days and 30 days respectively. The producer’s export allocation for LLDPE in the coming month might be very limited due to the shutdown, and thus the maker is very firm on their cargoes this week.