Asia Daily PP and PE Overview 26 October 2017

In China, futures market weakened further whereby January delivery contract for PP loses CNY204/ton ($31/ton) to reach CNY8859/ton ($1140/ton without VAT) while LLDPE inched CNY95/ton ($14/ton) lower to close at CNY9760/ton ($1256/ton without VAT).

Trading activities in both local and import grounds are slower as players voicing concern over the cloudy expectation toward the near term outlook with some peak season coming to the end soon. Domestic PP and PE offers the added at a stable to CNY50/ton ($8/ton) lower compared to yesterday, where buying appetite is claimed to be significantly low, perhaps with the weaker future market, buyers are waiting for cheaper price level after some hand to mouth basis replenishments past few days.

Import PP market traded at a stable to slightly softer trend compared to beginning of the week with some $1120/ton level re-appeared for Indian homo-pp cargoes, a trader added, “Market sentiment is weaker this week as basically firmer price level earlier of the week were unable to have any deals achieve, as buyers are expecting for more discounts from the domestic market. However, we believed that continuous limited supply availability could still support prices to remain firm in the near term.” 

There are very limited movements on the import PE market, with traders voicing expectation over upcoming supply pressure for the market. A trader informed, ”We have very small volume of Iranian PE cargoes arriving to the port this week, and more to be expected for next month including LDPE cargoes. Meanwhile we are also expecting offers for deep sea cargoes especially USA to start offering by end of next month which might add further pressure on the price trend.” 

Another trader said, ”Some of the peak season including some agricultural film products and Single Day demand are going to end soon hence we are expecting for a price correction period in the near term. Most of our customers have replenished cargoes based on need past few days hence our sales today are muted.”

In Southeast Asia, there are very limited real transaction reported across the region and it appears that buyers are not very aggressive in scouting for new cargoes though November shipment offers have just been announced.

Bids for Middle Eastern PP and LLDPE film emerged at well below the initial offers, indicating high level of market resistance and the lack of confident in the near term outlook among buyers. “Our regular customers are asking for $40-50/ton discount from initial prices. With the current supply condition, we think very less likely that our principal supplier would concede to such reduction,” a distributor offered Saudi homo-PP at $1190/ton and LLDPE film at $1200/ton, CIF Vietnam, LC AS term said.

Meanwhile, several deals for Saudi LLDPE and HDPE film are concluded at $1190/ton and $1210/ton respectively, with the same term to Vietnam. However, buyers only committed to small quantity, as according to sources, prices have not met the expectation. “We only purchased two containers since the risk is too high. We fear that market would tumble toward the end of the quarter if ethylene drop in higher pace,” a buyer added.

Players fear that the delay in Iranian PE cargoes might prolong until November, as several major plants here are either still shutdown or operating at lower rate. Iranian traders are blaming the disruptive production status to the lack of upstream supply, deriving for the recent pipeline break down at the South Pars gas field. Repairing works to bring gas supply back to normal was initially planned to complete in September, could extend into November, industry participants said.

Import homo-PP to Southeast Asia is firm. Even with flat trading activities in the nearby China market, overseas sellers refused to down-adjust prices thank to strong support from the limited supply condition. “We have not seen any prices for dutiable cargoes below the $1150/ton threshold at the moment. Offers are coming down too slowly and we decided to wait until mid November before making fresh buy. For now, we only source small quantity from local ground,” a Vietnamese converter reported.

Import PP market in Indonesia is facing heavy downward pressure from weakened domestic ground. Local traders continue to push homo-PP yarn cargoes at competitive levels, giving buyers an upper hand in negotiating with overseas sellers. “We enter deal for Middle Eastern homo-PP at $1150/ton CIF Indonesia today as we are completing the BMDTP allocation. Demand for our end product is only regular, but we hope to receive better orders in the coming month,” a sack maker said.