Asia Daily PP and PE Overview 4 October 2017

There are no trading activities in China as players are away for National Day holiday and Mid-Autumn Festival. Market would resume on 9 October.

In Southeast Asia, market sentiment remains very much quiet, especially in the PE market. Regional players are taking more cautious stance about making purchases after ethylene costs in Asia plunged more than $50/ton from last week and still signalling possibility of further reduction. Though import PE offers to both China and Southeast Asia have softened two weeks earlier than ethylene, players are still pressing for additional discounts. “Suppliers refused to give any large discount, especially for HDPE film, claiming limited supply. We decided to wait for a while longer as ethylene might continue to fall in the near term,” a regional buyer said.

At the current ethylene price, most non-integrated PE producers are still making loses and therefore suppliers are very cautious about cutting PE offers, besides the lack of inventory pressure. There is a very strong sense of optimism in the market that post-holiday demand in China would be healthy, which might prevent any significant plunge. “And therefore, a correction in ethylene costs might only result in a small drop in PE prices”, a market source expressed expectation.

Meanwhile, Southeast Asian producers have also started to loosen stance on metallocene cargoes after bumping into stiff resistance from buyers. Thailand mPE are concluded at $1380/ton CIF Indonesia, LC AS term, a $40/ton reduction from initial offers. “Offer is unchanged week on week, however the supplier agreed to larger than usual discount. We decided to take a small quantity for immediate need,” a converter said.

There are very limited movements in the regional PP market and despite buyer’s tremendous effort in negotiating for price cuts; suppliers are just taking no compromises. “We received bids at $1140/ton for Middle Eastern homo-PP, which is $35/ton below offer levels. Market is very slow this week and we are monitoring further before making decision,” a regional trader informed.

At the meantime, demand for homo-PP in India has been relatively healthy and even with the latest price increment introduced earlier this week; most domestic producers are still selling well, players said. “And therefore, we might not see many Indian homo-PP in Southeast Asia in the near term,” a distributor added.