Asia Daily PP and PE Overview 3 September 2018

CHINA

• Falling futures market created the opportunity for arbitrage traders
• MEA maker down-adjusted PE offers to China 

Polypropylene (PP)

January delivery contract on Dalian Commodity Exchange continues to roll lower, forcing domestic suppliers to slash spot offers by up to CNY100/ton ($16/ton) to attract sales. The reduction is spot offers do not seem to attract sufficient attention as buyers are turning to arbitrage traders, who attempt to deplete on-hand quantity as futures market plunged from the multi-year high levels. 

“We have sold out 70% of the on-hand stocks after offering a larger discount than producer’s price list. Buyers might become even more active if prices continue to drop,” an arbitrage trade reported.

Polyethylene (PE)

In the import market, a major Qatari market down-adjusted PE offers by $10-20/ton from last week, bringing latest price list to $1110-1120/ton for LLDPE film, $1150/ton for LDPE film and $1310/ton for HDPE film, CFR China, LC 60 days term. The adjustment has not caught major response from buyers, as most movements are focused on the local ground on the first trading day of the week.

“Customers would come back later for import cargoes. With these competitive prices, we hope market would accept without much hesitance,” a source close to the producer said. The source informed that all PE lines have restarted from maintenance shutdown and currently running at the regular rate.  

SOUTHEAST ASIA 

• Overseas sellers concluded PE business in Indonesia
• Regional PP market is calm; players await clearer direction 

Polypropylene (PP)

The regional PP market is rather calm on the first trading day of the week, as most overseas sellers have not opened fresh price list. Southeast Asia buyers are generally on a wait and see position, hoping to obtain deals below the $1250/ton threshold for dutiable origins following the latest cuts in the near-by China market. 

Meanwhile, further depreciation of the Indonesian Rupiah boosts domestic offers for homo-PP by IDR300,000/ton ($20/ton) in the distribution market regardless of the stable price list from a major local producer. “Our customers understand the cause of the hike, hence show better tendency to accept the latest offers. Just that purchased quantity is smaller,” a trader said. In the meantime, the latest regulations on small trucks weight limit do not seem to have a great effect on the market, sources informed.      

Polyethylene (PE)

Major Middle Eastern producers have concluded September shipment businesses for LLDPE film to Indonesia in the range $1130-1150/ton CIF, LC AS term while USA materials are available in the range $1100-1120/ton. The influx of deep-sea cargoes is pressurising domestic suppliers, which explain to why local LLDPE film prices have been mostly unchanged despite the currency issues. However, transactions are generally smooth.

On the other hand, the regional HDPE injection market is rather depressed with the presence of low-cost USA materials. In fact, on the first trading day of the week, an international trader opens price list at $1065/ton CIF Vietnam, LC AS for prime grade, melt flow index at 7 point. “Additional discount of $12/ton for TT payment,” a trader source added.