Asia Daily PP and PE Overview 30 October 2017

In China, futures market starts the week in the red zone. January delivery contract for PP fell CNY187/ton ($28/ton) to CNY8764/ton ($1126/ton without VAT). LLDPE contract shredded CNY215/ton ($32/ton) to close at CNY9610/ton ($1235/ton without VAT).

Trading activities in domestic spot market drop visibly with prices for both PP and PE softened CNY50-100/ton ($8-15/ton) from last week. Total PP and PE inventories at domestic major producers’ warehouses are reported at 680,000 tons as of 30 October 2017, which is not sufficient to create any major pressure on supplier side. A trader added, “Our customers are not interested in asking for new offers and we only managed to conclude small number of deals. We are loosing confident in November outlook and started taking more cautious stance now.”

It is reported that demand for homo-PP injection from toys manufacturers is dropping quicker than expected as the preparation for year-end festive season is getting over. “End product orders for this year are weaker than last year. We are slowing down on replenishment to avoid inventory risk,” a converter received offers for Saudi homo-PP at $1110/ton CFR China said.

There are very few new offers for PE observed in the import market though Indian LLDPE film showed a drop of $10/ton week on week to $1140/ton CFR China term. “And buyers still don’t find the price to be attractive. At the moment, we are not seeing strong support for a rebound and the sluggish condition might spread into November,” a trader said.     

In Southeast Asia, market sentiment is rather quiet on the first trading day of the week. Regional players are watching out for possible impact of firmer energy market on the near term trend, though there have been diverged opinions on the issues.

A major Saudi Arabia producer down-adjusted LLDPE film and PP offers to Vietnam late last week claim to only have homo-PP injection cargoes remained at the moment. “However, our customers are placing bid at as low as $1130/ton for these cargoes. Demand for injection grade is apparently lower than yarn, and we are waiting for final decision from the principal supplier,” a distributor said.

Suppliers are hoping that firmer energy complex would support the sentiment in the coming days. “We are not expecting market to overturn, but at least become more stable. Buyers are still taking the wait and see stance, however, we do expect better purchasing activities in coming days,” another trader added.

Indonesian buyers are rushing to complete the BMDTP allocation, though remain selective for shipment time and prices. A converter purchased South Korean homo-PP at $1150-1160/ton CIF Indonesia, LC AS term said, “We decided to proceed with the purchase as an alternative to the longer shipment Middle Eastern cargoes. We do not see any strong push from energy market as suppliers might need to reduce inventories levels ahead of the year-end book closing.”

The regional PE market is quiet. Softening upstream ethylene costs are affecting buyer confident despite rapid surging crude oil prices. International suppliers are attempting to maintain the firm stance on the cargoes, just yet; the deep cut reported in Saudi LLDPE film last Friday has jeopardized the whole effort. “HDPE market has better chance to hold firm, but not LLDPE and LDPE film. Demand in Southeast Asia is sluggish and if this condition persist, suppliers might divert cargoes to other markets,” a regional trader added.

Local traders in Indonesia continue to cut LLDPE film prices by IDR200,000-300,000/ton ($15-22/ton) from last week in spite of the stable price list given by a major domestic producer. “HDPE film in contrast, very tight in supply, and therefore, prices might take longer to adjust,” a buyer said.