Asia Daily PP and PE Overview 10 October 2017

In China, futures market turn dull just on the second trading day after the long National Day holiday. Both contract for PP and LLDPE fell CNY114/ton ($17/ton) and CNY60/ton ($9/ton) respectively. PP futures closed at CNY8732/ton ($1133/ton without VAT) and LLDPE closed at CNY9455/ton ($1226/ton without VAT).

Weaker futures market affected the sentiment in spot market seriously. The number of deals reported today are visibly lower than the previous trading session though traders continue to implement CNY50-100/ton ($8-15/ton) higher for both PP and PE. A domestic producer said, “We sold nearly 4500 tons of LLDPE film yeterday. Demand for homo-PP, HDPE and LLDPE film is softer today, however, surprisingly, the number of LDPE film order is good.” The source added that sales pressure is not intense given the absence of USA and Iran materials, and temporary there are still supports for keeping prices firm.

There are mix signals in the import PE market, especially on LDPE film cargoes. While some traders decided to deplete cargoes at loses claiming dull demand condition, others managed to protect the margins. “Buyers are unable to accept Saudi LDPE film above the $1250/ton mark, hence we cut into our own profit to close deals at $1225/ton CFR China, LC 60 days term. We are having same origin cargoes for HDPE film at $1260/ton, but unable to attract interest,” a trader said. Meanwhile, import homo-PP hold steady on the tug of war between limited supply and reluctant buyers. No major movement reported.

In Southeast Asia, the general sentiment remain relatively calm on the second trading day of the week as players are still waiting for clearer direction in the nearby China market. Couple of overseas suppliers maintain PE offers to the region on stable to firmer notes, especially for HDPE film, citing limited supply.

A Saudi Arabia maker keep LLDPE film prices at $1210-1220/ton while lifting HDPE film prices by $10/ton from last week to $1240/ton, CIF Vietnam, LC AS term. Buyers in the country are attempting to press for discount, however the suppliers are not giving any ground. A buyer commented, “Supply for this particular HDPE film grade is very tight, both in the import and local ground, which explain to the increases the producer implemented. We are discussing for some discounts, however unsuccessful. We might need to monitor a little further.”

Meanwhile, another Saudi Arabia producer keep both LLDPE and HDPE film prices unchanged from last week, at $1200/ton and $1230/ton respectively, all based on CIF Vietnam, LC AS term. Many customers are asking for $30/ton discount to close deals and receiveid no respond from the supplier. “It is because our principal supplier is having shutdown at the moment, hence there is no sales pressure,” a distributor said.

Domestic availability for HDPE film in Indonesia is reported to be tight too, as a mjor local producer cut contract allocation for this grade by 30% from last month. At the meantime, there are no sign of a pick up in demand with converters witnessing drop in end product demand by 25%.

In the regional PP market, suppliers continue to divert cargoes to other market where acceptability is better. A Southeast Asian producer informed, “We are redirecting some homo-PP cargoes to Japan because buyers here are able to accept prices at $1240/ton due to limited local supply. At the meantime, Vietnamese and Indonesian buyers could only take in cargoes at $1200/ton level.”

As CommoPlast reported on 2 October, Japan Polypropylene Corporation (JPP) unexpectedly shutdown its 300,000 tons/year PP unit in Kashima prefecture after running into serious technical issues. The plant is expected to remain offline for six months.

A Saudi Arabia maker also rollover homo-PP offers to Vietnam and Indonesia at $1180/ton CIF, LC AS term. Many local traders in Vietnam have skipped purchases at this price levels for several weeks in a row, bringing up a serious concern that domestic ground might be short of supply November – December period. “However, we are not feeling comfortable making purchases at this price as market outlook in China remain unclear. We are still on the wait and see position,” a trader said. Other converters are bidding in the range $1130-1150/ton and currently waiting for feedback.