Asia Daily PP and PE Overview 24 October 2017

In China, futures market weakened slightly from the previous trading day following the closing ceremony at the National Congress of Communist Party. January delivery contract for PP slipped CNY32/ton ($5/ton) lower to CNY9057/ton ($1166/ton without VAT). LLDPE contract loses CNY25/ton ($4/ton) to CNY9835/ton ($1266/ton without VAT).

Trading activities in domestic spot market remain relatively calm as players are waiting for government to announce any policy changes after the Congress that might affect the market. Local prices for most PP and PE cargoes are stable, except that fact that HDPE film is coming down CNY50-100/t ($8-15/t), indicating the peak demand for this grade is over. “We expect a correction in HDPE film prices soon. Our customers are watching out for new market policies and therefore very cautious about making large buy. However, considering the low on-hand inventories, we think buyers would still need to continue making replenishment,” a trader said.

In the import market, couple of international suppliers have also stepped back on HDPE film prices as resistance built up after import offers for this grade climbed to the multi-years high levels. “We have down-adjusted offers by $20/ton from last week, and yet customers are mostly still reluctant to enter deal. If domestic prices extend the softening trend, it would generate a downswing in import market too,” a trader offered Saudi HDPE film at $1240/ton CFR China said.

The recent escalated HDPE film demand in China has attracted a great number of cargoes from overseas sellers, including re-export parcels from Southeast Asia. Most of these shipments are scheduled to arrive by second half of November, which caused severe concern regarding the medium term outlook.

There have not been many changes in import homo-PP offers and after a brief reduction rush reported earlier last week, suppliers come back to the firm stance on prices. Import offers for dutiable cargoes are holding in the range $1130-1170/ton CFR China, LC 0-90 days term with very limited real transaction seen,

In Southeast Asia, regional producers started offering November shipment offers for both PP and PE, mostly at stable to softer levels. A major Malaysian producer cut homo-PP and PE offers to Indonesia by $30-40/ton from last month in spite of limited cargoes available. Demand in Indonesia, however, remains floppy as buyers have the alternative of more competitive local materials. “We are able to obtain PP thermoforming in domestic market at $1250/ton FD Indonesia, 30 days payment term, which is cheaper than the latest offers from Malaysian maker. Orders for our end product is very low,” a converter said.

At the meantime, local trader cut homo-PP prices in Indonesia by $20-30/ton from last week, bringing cash payment offers to $1220-1230/ton, FD Indonesia, excluding VAT. A woven bag manufacturer commented, “Demand for our end product is very weak and we plan for no fresh replenishment in the coming days. Prices might soften slightly in the near term, however suppliers are trying very hard to minimise the range of the reduction.”

In the PE sector, regional players are waiting for new prices from overseas suppliers and many are expecting reduction, especially on LLDPE and LDPE film cargoes. After a major Saudi Arabia producer announced November shipment PE offers to Vietnam in the previous trading day, more buyers started showing resistance towards prices above the $1200/ton mark for LLDPE film. “Demand is too weak to support firm prices and with ethylene continue to show signs of weakening, we prefer to put on wait and see mode,” a buyer commented.

Import offers for LDPE film from various origins indicate a moderate drop in value. “And we are still facing real difficulties to conclude deals as buyers are very reluctant. This is because local market is very weak, which might persist in the near term,” a trader offers Iranian LDPE film at $1250/ton CIF Vietnam said.