Asia Daily PP and PE Overview 25 May 2016

In China, futures prices on Dalian Commodity Exchange completely reverted the weakening trend, which persist more than a week, to settle at higher level today. Contract 1609 for September delivery concluded CNY60/ton ($9/ton) higher for PP at CNY6387/ton ($832/ton without VAT). LLDPE contract advances for the second day, closed at CNY8020/ton ($1045/ton without VAT), some CNY95/ton ($14/ton) higher.

Firmer futures market has also elevated domestic PP and PE spot offers, with fresh price list announced at CNY50-100/ton ($8-16/ton) increased from the previous trading session. However, many market participants are away from their desks for China Plastics Industry Conference (CPIC) from 25-26 May 2016. Several traders contacted by CommoPlast are still expressing their willingness in giving discounts to serious buyers in the absence of confidence in the near term outlook.

A trader in Guangdong reported, “We maintain our offers unchanged from yesterday and open to negotiation with serious buyers. Our customer seems still monitor the sustainability of the current rebound in futures market; hence buyers mostly stand on the side-line.” Another trader hopes to deplete on hand cargoes with the support from the firming futures market saying, “We hope to see the month of June open at higher level. Yet, market might find little support for sustainable firming trend amid low seasonal demand.”

Import market remains largely stable from the earlier trading day with a trader in Shanghai expect demand for LLDPE film to pick up again in August as the agriculture film sector return to the blooming cycle.   

In Southeast Asia, sentiment remains weak and buyers continue to procure material with caution. Couples of major regional and international producers have announced new prices at lower level from last month, following the trend set by others early this week. In the PP market, import homo-PP prices to Vietnam and Indonesia continue to see slight downward adjustment from the previous trading session with a Vietnamese buyers said, “We purchased 100 tons each of Saudi homo-PP yarn at $960/ton and Singapore homo-PP yarn at $970/ton, some $20-30/ton lower than last week. We think the market is still has room for further discount in the near term, therefore, we are not planning to commit to larger cargoes.”

Meanwhile, Indonesian buyers reportedly received Vietnamese homo-PP at $20/ton reduction from earlier this week to reach $1060/ton CIF Indonesia, LC AS term. Several deals were observed at $10-15/ton discount, however, buyers remain cautious about the near term outlook. A woven bags converter said, “Prices are falling is a very slow pace, hence we prefer to make small purchases based on market movement. Weaker sentiment in the major regional market is pressurizing domestic sellers in Indonesia as well, from which we see local traders are very flexible in price negotiation these days. Demand for our end product is normal.”

Despite the common expectation of further decreases among market players, most still belief that prices would not re-visit the low levels seen early this year with support from the general tight supply stemming from upcoming shutdown at Southeast Asian plants.

The regional PE market is in mid of negotiation before concluding deals after major international suppliers open new offers at up to three digits reduction from last month. A Malaysian converter received Middle East LLDPE film at $1130/ton CIF LC AS term reported, “We place bid at $10-20/ton lower from the initial offer and our supplier has yet to come back on this. We expect domestic LLDPE film supply to remain tight in the near term given unsettled plant issues, for that, we need to obtain import cargoes to sustain production.”

Vietnamese and Indonesian buyers are also requesting for discount on PE cargoes and might come to deal conclusion in the next couple of days. A buyer said, “Our supplier informed they have completed booking a good quantity of LLDPE film, therefore no further discount shall be available. In this case, we might only buy a small quantity to cut down on loses. Domestic market is weak and traders are agreeing to lower prices to close deals in pessimistic outlook in the near term.”  

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