Asia Daily PP and PE Overview 17 October 2017

In China, futures market remains on the firming trend with good number of transaction reported. January delivery contract for PP added CNY99/ton ($15/ton) to close at CNY9106/ton ($1176/ton without VAT). LLDPE contract gained CNY110/ton ($17/ton) to reach CNY9845/ton ($1271/ton without VAT).

Domestic spot offers for PP jump up as much as CNY200/ton ($30/ton) day on day while PE prices are CNY100/ton ($15/ton) higher. Most cargoes takers are still traders, as converters are not making profit buying at the current prices, sources said. “Except for HDPE film, sales for other grades are just mediocre. We think converters are not able to hold purchases much longer considering the low on hand inventory levels. It is the traditional high demand season for the flexible packaging and agricultural film sector, hence outlook seems positive,” a trader commented.

In the import market, import HDPE film prices are escalating with offers based on CFR China, LC 0-90 days rise $25/ton week on week on the back of limited supply. Prices below the $1250/ton are becoming relatively scarce in the market and most suppliers are not having ready cargoes at the moment. Middle Eastern suppliers are not active in giving new offers and even with offers, allocation is not confirmed. A trader offered Saudi Arabia HDPE film at $1270/ton CFR China and willing to give $10/ton discount on deals, “Customers are pressing for prices below the $1250/ton, however we are not planning to adjust prices beyond the given range. If customers were to confirm the orders, we would have to wait for confirmation from our principal supplier.” Chinese players also reported the availability of less than 1500 tons of USA PE cargoes for December shipment, though buyers are not showing strong interest citing high level of uncertainties.

There were several deals for Indian homo-PP reported at $1090/ton CFR China, LC 90 days term, however the quantity is rather small, which might not reflect the real market situation. Many others traders are still maintaining offers for dutiable homo-PP in the range $1120-1130/ton CFR China term.  

In Southeast Asia, import PE to the region started to soften slightly from the previous trading day, especially for LLDPE and LDPE film while offers for HDPE film are very limited. Vietnamese traders continue scouting for locally held HDPE film cargoes to re-export to China for better margin.

Domestic HDPE film at the moment ranging VND29,600,000-30,200,000/ton ($1184-1208/ton without VAT) FD Vietnam, cash term and with higher import HDPE film prices to China; traders are spotting the window of opportunity. “We hope this could inflate local demand and prices. Trading activities here has been really sluggish and we are unable to make any replenishment given high import prices,” a local trader commented.

Meanwhile, regional producers announced November shipment offers with $20/ton reduction. Malaysian LDPE film stands at $1340/ton and HDPE film at $1270/ton, all based on CIF Vietnam, LC AS term. A distributor informed, “We urged buyers to decided quick on HDPE film parcels as China market is actively seeking for this grade at the moment. At the meantime, customers show heavy reluctance toward LDPE film claiming that other suppliers are offering at more competitive levels.”

Domestic PE market in Indonesia continue to weaken as traders implemented additional reduction on LLDPE film following a $65/ton cut on in the previous trading day. “Local market is under pressure as converters are selling their stock at relatively low levels. Firming trend in China is not providing sufficient support and we are very cautious at the moment,” a trader commented.

The regional PP market remains very much steady. Buyers continue to press for prices below the $1150/ton threshold for dutiable origins, “Some are asking for $1130-1140/ton levels and we have rejected all such bids. Supply is tight region wide and we prefer not to make any adjustment at the moment,” a trader said.

However, pressure on the PP market might built up if propylene costs drop further in the coming days. Industry participants are reporting of bloated propylene inventories in Northeast Asia region due to sluggish trading activities in the downstream PP market and extra allocation from local crackers. “However, we think this downtrend is very temporary as supply for propylene might tighten again in November due to maintenance season in Fareast Asia region,” a trader said.