Asia Daily PP and PE Overview 9 October 2017

In China, futures market opens the first trading day after the holiday at firm notes. January delivery contract for PP inched CNY28/ton ($4/ton) higher to close at CNY8784/ton ($1131/ton without VAT) while LLDPE contract increased CNY40/ton ($6/ton) to reach CNY9515/ton ($1225/ton without VAT).

Domestic spot market starts trading in lukewarm sentiment. Many buyers reportedly send in price inquiries, however the number of actual deal reported remains low. Total PP and PE inventories at local producers’ warehouses reach approximate 820,000 tons, indicating moderate sales pressure from the suppliers. However, traders are very optimistic about the near term marker outlook, pointing to the low on-hand stock at the converter’s side. “It is also the traditional high demand season from the packaging and agricultural film sector. Hence, we do expect buyers to become active soon in preparation for the year-end festive season,” a trader commented. Spot PP and PE prices are CNY50-100/ton ($7.5-15/ton) higher compared to the pre-holiday period.

In the import ground, most international suppliers have not opened fresh offers, though traders started giving PE prices at relatively high level. Middle Eastern HDPE and LLDPE film are mostly above the $1200/ton threshold, CFR China, LC AS term. A source added, “Iranian HDPE cargoes are delayed further to November, which keep HDPE availability in the market very tight. We do not expect any sizable adjustment in PE prices even with the current ethylene costs.” Import LLDPE film from Middle Eastern to China stand at $1190-1220/ton CFR, LC 0-60 days term.

Import homo-PP remains in the range $1130-1160/ton CFR China, LC 0-60 days term for dutiable origins and deals are minimal. “Customers are placing bids at $1100/ton for Saudi Arabia materials, however we refused to accept. Supply for PP is very tight considering a series of local plant shutdown due to environmental control, and therefore we would hold firm for now,” a Shanghai based trader said.

Market is monitoring very closely the impact of up coming Communist Party Congress on the market. Market experts are expecting the Chinese government to step up measures to stabilise the market during the Congress to avoid any kind of disruption. Players therefore, do not expect any major shift in market trend within October and converters might be purchasing to satisfy only immediate need.

In Southeast Asia, there are very limited trading activities on the first trading day of the week as players are waiting for clearer demand signal from the nearby China market. Import homo-PP to the region remains on the stable to softer trend, though no drastic movement observed.

Singaporean homo-PP concluded at $1200/ton to Vietnam at $1210/ton to Indonesia, all based on CIF, LC AS term, which is $5-10/ton below last week’s levels. A Vietnamese converter commented, “We have purchased Middle Eastern homo-PP cargoes at $1160/ton last week and currently waiting on the sideline. Market direction is still unclear but we hope to obtain additional cargoes at $1150/ton for dutiable origin.”

In Indonesia, a number of Philippines homo-PP parcels face delay, which might tighten overseas supply a little more. “Even in domestic ground, the producer suspended all offerings over the past week due to high number of backlog. Domestic market is still slow and we need to monitor further for any movement in demand,” a Philippines trader commented.

There are very limited numbers of new offers in the regional PE market and suppliers are not willing to offer any large discount in spite of heavy concern on the upstream ethylene market. “Except Indian LLDPE film cargoes are offered below the $1200/ton threshold, at $1170-1175/ton CIF Vietnam, other cargoes, especially Middle Eastern origin, are very firm. We are taking a safeguard step by just wait and see until ethylene market become more stable,” a Vietnamese buyer said.

At the meantime, demand for PE in domestic Indonesia remains stagnant and in the latest weekly price announcement, a major domestic producer keep offers unchanged. Traders are complaining about the difficulties they face in attracting sales despite more competitive offers are given. “Therefore, we have diverted most of the parcels to South America, Turkey and Europe where demand is apparently better than Southeast Asia. We are also watching out for the state of post-holiday buying activities in China, hoping that sentiment would improve in the coming days,” a Middle Eastern producer informed.