Asia Daily PP and PE Overview 11 July 2016

In China, futures prices on Dalian Commodity Exchange open the week at a more stabilised condition after suffered from severe lose last Friday. September delivery contract closed at CNY15/ton ($2/ton) higher for PP while LLDPE shred only CNY5/ton ($1/ton). Both contract settled at CNY8094/ton ($1034/ton without VAT) and CNY9095/ton ($1162/ton without VAT) respectively.

Domestic spot market continues to move lower as fresh price lists from major local makers showed CNY50-150/ton ($8-22/ton) reduction for both PP and PE parcels compared to last week. Trading activities disappoint many traders with reluctant buyers, who are hoping to see some sort of price correction in the near term. A trader in Fujian informed, “Even with the latest price cut, buyers are showing very little interest in making fresh replenishment. We visited some of our regular customers recently, and most of them are operating at 40% capacity due to weak end product demand. We feel a little concern as most cargoes are on trader’s hands at the moment.”

In the import market, import homo-PP remains unchanged at $1020-1040/ton CFR China, LC 0-90 days term. The downside is that buyers are showing stiff resistance toward the upper end of the overall price range. Players appear to be in no rush to conclude deal to monitor further development in the local market to gauge the likely impact on the import ground.

Import HDPE film from Taiwan jumped $30-40/ton from last week to reach $1210-1220/ton CFR China, LC AS term; however, no deal was reported at these new prices. It is worth noting that some off-grade LLDPE film cargoes from Saudi’s Sadara are showing up in China today at relatively competitive prices. This has triggered even more caution among players since there are expectations that on-spec cargoes might be available soon.

In Southeast Asia, market resumes operation with limited number of new offers at stable to firmer levels compared to last week. Buyers across the region are taking a more cautious stance to monitor further development after the energy values plunged to the lowest levels since early May 2016. An international trader offer Southeast Asian HDPE film and blow molding at $1195/ton CIF SEA, TT in advance term said, “We might encounter some resistance, yet we prefer to hold a little longer before deciding on the next move.”

A HDPE bag converter active in exporting to Japan informed, “We received regular orders for our end product, hence we plan to source some cargoes to cover immediate needs. We are not intending to purchase in large quantity as the restart of Shell Singapore’s cracker end of this month might have some impact on the upstream market. For this, we prefer to hold conservative stance.”   

In regional local markets, several traders in Indonesia open fresh offers at stable to firmer levels, though market respond is not very good in the absence of buyers. Meanwhile, players in Vietnam continue to see improved demand for LLDPE film as there is very limited supply domestically, which pushed prices higher right at the beginning of the week. A trader offer locally held Saudi LLDPE film at VND31,800,000/ton ($1295/ton without VAT) FD Vietnam, cash term said, “Buyers show very little resistance towards the new prices with the support from constraint supply. We are not expecting this condition to improve in the coming days since most regular Middle Eastern cargoes only arrive in the coming month.”

Regional PP market has not seen any drastic movement though sellers claimed to have sold out their available cargoes. However, in contrast with the PE market, players active in PP sector are portraying a stronger sense of diminishing confidence in the near term outlook. A buyer commented, “We have suspended our purchasing activities as we feel really uncertain about the near term outlook. Supply in local market is not comfortable at the moment, yet buyers are simply waiting for cargoes to arrive end of July onward, which is expected to ease the current tightness. We think this might have some adverse impact on the import market.”

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