Asia Daily PP and PE Overview 14 June 2016

In China, Dalian Commodity Exchange followed a mixed direction today with contract number 1609 for PP inched CNY29/ton ($4/ton) lower to settle at CNY6840/ton ($887/ton without VAT). LLDPE futures continue to add CNY15/ton ($2/ton) to reach CNY8255/ton ($1071/ton without VAT).

Physical spot offers for both PP and PE in domestic market continue to increase CNY50 ($8/ton) and CNY100 ($16/ton) respectively with buying interest is reported to remain strong. This in fact has resulted in another 40,000 tons dropped in local inventories approximately on Monday, private data showed. However, the cautious stance has not been completely swiped away which explains to why the extent of price increment is rather small.

A trader from Hebei told CommoPlast he has concluded a satisfactory number of deals for homo-PP and LDPE film to local buyers today without committing to any major discounts. The source added, “As most suppliers have sold out a desirable quantity of material, we think market might remain strong for the rest of June. We are just a little concern about the medium term outlook as futures markets started to show some signs of weakening.”

There are no major changes observed in the import market today, yet demand for import homo-PP is trailing of that in domestic ground for buyers are taking advantages of weaker currency exchange rate. Players across major cities in China are sharing a similar comment on the limited number of offers for homo-PP from international suppliers with a converter in Yantai said, “We couldn’t find many offers in the import market these days, hence we have been sourcing in domestic market hand to mouth basis. This week we decided to the skip replenishing any cargo, as demand for our end product is not of that great while we are still having concern over the sustainability of the current trend.”

Demand for LDPE film is also seeing an uptick with sellers reported good deals from agriculture film converters. This has had many players speculating for a more stable to firm trend in the near term.    

In Southeast Asia, there is very limited number of offers reported for both PP and PE as sellers claimed to have sold out available allocation while buyers are mostly on the side-line waiting for new offers. A major Thailand producer announced new HDPE prices to Vietnam and Indonesia at diverged trend, which market players attributed to the market condition at each location. Indeed, the latest offers from the producer indicate $5-15/ton increased to Vietnam while it is $10/ton reduction to Indonesia. Source from the producer commented, “We are not allocating any HDPE film cargoes to Vietnam this week due to sluggish buying interest in this market. We are not having high inventories at the moment due to some plant issues earlier, hence we plan to remain firm stance on our cargoes.”

Supply for LLDPE film from international suppliers remains tight within the region with traders active in selling to Vietnam especially reported seeing more enquiries from buyers. Several players have complained about the lack of LDPE film availability from the import sources. Indonesia market is in contrast, showing a relatively calmer stance, as players are refraining from making large purchases ahead of the long holidays. A converter said, “We are not in rush to replenish additional quantity as we are covered till mid-August. Demand for our end products normally slowdown after the Ramadan, hence we are a bit concern about the recent rebound trend in the neighboring countries.”

Regional PP market remains on the firming trend with no fresh offers from major Middle Eastern producers. An international supplier sold homo-PP at $995/ton for Indian origin and at $1010/ton for Chinese origin, all based on CIF Vietnam, LC AS term. The trader said, “We are not having any cargoes in hand now, but Vietnamese buyers are very active sending in their purchase inquiries these days. We think this trend might sustain in the coming days.”

It is interesting that Vietnamese buyers have been very aggressive in replenishing cargoes in the past two weeks with expectation that firm energy values and tight supply might keep the market escalating in the near term. Moreover, expected better demand during the traditional peak season in Aug-Sept period also encourages buying appetite for deep-seas cargoes. Other markets within the region have yet to show such convincing stance.

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