Asia Daily PP and PE Overview 01 June 2016

In China, futures prices on Dalian Commodity Exchange reversed the sharp firming trend recorded in the first two trading days of the week with both contract for PP and LLDPE settled lower. September delivery contract for PP inched CNY17/ton ($3/ton) lower while LLDPE futures lose CNY50/ton ($8/ton) from earlier trading day.

Domestic spot market opens the month at firmer levels as local producers implemented some CNY100-200/ton ($15-30/ton) hike on PP cargoes while PE prices is up CNY50-100/ton ($8-15/ton). Players attributed the price hike to the lack of sales pressure at the beginning of the month while remain cautious about the outlook after the Dragon Boat Festival. A converter in Wenzhou said, “Next week shall be a short trading week due to the holidays while most of the domestic PP plants is restarting after maintenance schedule. Therefore, we expect local supply to increase by mid of the month. Since our end product business is week, we only replenish raw material on need basis from local market.”

In the import market, homo-PP from dutiable origins has breached below the $900/ton, which the market has been holding very strongly on in the past two weeks. A forward selling Indian homo-PP cargoes for July and August shipment at $860-870/ton CFR China, LC 90 days term commented, “We are not very optimistic about the near term outlook despite the overall limited availability. We have only offered to some regular customers at the above-mentioned price levels, and currently waiting for the respond.”   

Import PE market continues to move south with HDPE injection from various origins return to the level below $1000/ton for the first time since beginning of March 2016. One of the best selling grades in China market in the past months – HDPE blow molding is also facing downward pressure in line with increased supply from Iranian suppliers, market sources reported.

In Southeast Asia, buyers start to show a certain degree of interest in the homo-PP cargoes offered at the lower end of the overall price range. Indeed, several regional converters have been actively searching for import cargoes for July arrival, yet most international suppliers are not offering, claiming lack of availability. A Vietnamese converter said, “We think the market is getting nearer to the bottom, hence we are checking with our regular suppliers to replenish some inventories within this couple of weeks. So far, most of the sellers we contacted claimed to have sold out available cargoes for this week. Export business for our end product is good, but domestic market is rather disappointed.”

Meanwhile, local traders in Indonesia continue to adjust their offers down to attract buyers ahead of the fasting month starting 6 June, which is considered as traditional slow season for polyolefin demand. A sellers informed, “Most of our customers are expressing their buy idea at $1100/ton excluding VAT for homo-PP based on FD Indonesia, cash term. Converters are not holding high inventories at the moment, therefore we expect demand to pick up after the Ramadan holidays, as buyers return to make replenishment.”

Meanwhile, sentiment in the regional PE market is seemingly slower as market participants refrain from making purchases, expecting to see lower prices in the near term. This is in spite of limited supply for LLDPE film grade. An international trader expressed sell idea for Iranian HDPE film at $1050/ton CIF Vietnam, LC AS term commented, “Supply for HDPE film is rather comfortable while demand is not catching up. We are open to negotiation with serious buyers as we are not very optimistic about the near term outlook. We are also having some Iranian LLDPE film cargoes that we are now monitoring the market movement before setting prices.”

Another trader active in selling to Europe market commented on the possible impact of the French petrochemical plants shutdown due to worker strike said, “We expect more supply from Turkey to appear in the European market as sellers attempt to maximize margins amid slower domestic demand during fasting month. Besides, we are not expecting large scale reduction in LLDPE film price in the near term with the support of supply tightness.”

In another news, Thailand Ministry of Finance issued official announcement on the revision of stamp duties on commodity plastics to the country to 3% from previous 5% for non-ASEAN members. The Circular takes effect once it is published on the Government Gazette, mean 14 May 2016.

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