Asia Daily PP and PE Overview 23 October 2017

In China, futures market is firm on the first trading day of the week. January delivery contract for PP added CNY78/ton ($12/ton) to reach CNY9068/ton ($1167/ton without VAT). LLDPE contract inched CNY35/ton ($5/ton) higher to close at CNY9850/ton ($1268/ton without VAT).

Trading activities in both domestic and import grounds are limited as players are monitoring market movement after the National Congress of the Communist Party. However, following the firming trend in the futures market, traders lifted spot offers for both PP and PE by CNY50-100/ton ($8-15/ton). It is reported that total PP and PE inventories at major local producers’ warehoused currently stand at approximate 680,000 tons, which is still lower than usual and indicating below average sales pressure. “We remain optimistic that converters would return to the market soon given low stock on hand. The preparation for year end festive season is still in the peak, which might keep market active in the coming month,” a local trader said.

Import dutiable homo-PP to China holds steady at $1130-1160/ton CFR China, LC 0-90 days term. Market might become more receptive of the lower end of the overall price range if local market persists on the firming trend in the coming day, sources said. “However, surging prices would hurt downstream profit margins which might encourage buyers to only source materials hand to mouth basis only. We prefer to be conservative,” another trader added.

The HDPE market in China appears to be loosing steam though prices see little changes week on week, at $1260-1290/ton CFR China term, buying interest is dropping. “We placed bid for $40/ton discount for Thailand HDPE film cargoes. Supplier might not agree to such large discount immediately, yet we prefer to hold cautious stance,” a buyer received offer at $1290/ton CFR China for HDPE film said.

In Southeast Asia, there are very limited trading activities on the first trading day of the week. Import HDPE film to the region remains relatively firm given the scarcity of this grade, while other PE cargoes are following stable to softer trend.

A major Saudi Arabia producer announced November shipment PE offers to Vietnam at $10-20/ton softer for both HDPE and LLDPE film cargoes, bringing latest price list to $1220-1230/ton CIF, LC AS term. Players show better acceptance for HDPE film cargoes given the lack of availability. Meanwhile, many are not very attracted to the LLDPE film cargoes, claiming that several other producers have settled deals below the $1200/ton mark. “We have purchased some Thailand LLDPE film cargoes in the previous week at $1160/ton CIF Vietnam, and therefore we are not accepting anything above the $1200/ton at the moment. Demand in local market is weak,” a local trader commented.

At the meantime, a Qatari producer cut PE prices by $20-30/ton from last month to Indonesia at $1180/ton for LLDPE film and $1270/ton for LDPE film, all based on CIF LC AS ter. “We placed bid at $1160/ton for LLDPE film cargoes and currently waiting for the supplier feedback. Business in the flexible packaging sector is not very healthy and we are attempting to balance up the costs,” a convert said.

The regional PP market is rather quiet. Very few suppliers open fresh offers, just yet buyers are holding hope that prices could reduce a little quicker. “We are waiting for dutiable cargoes to breach below the $1150/ton mark to make fresh replenishment. Our regular suppliers have not offered new prices and we are waiting on the sideline at the moment,” a Vietnamese converter commented.

Import Middle Eastern homo-PP to Indonesia stands in the range $1150-1165/ton CIF, LC AS term, and the upper end of the overall range is facing stiff resistance. “Our regular supplier has been contacting us to offer Saudi Arabia cargoes. This could be due to the inability to close deals in China market and therefore we think market might have room for additional reduction,” an Indonesian buyer reported.