Asia Daily PP and PE Overview 21 July 2016

In China, futures prices on Dalian Commodity Exchange rebounded from the three losing sessions in a row today with contract 1609 for PP advanced CNY152/ton ($23/ton) to settle at CNY8192/ton ($1050/ton without VAT). LLDPE contract for September delivery added CNY180/ton ($27/ton) from yesterday to reach CNY9020/ton ($1156/ton without VAT).

Domestic spot market has yet to respond to firmer futures trading as local makers continue to down adjust their PP and PE offers by another CNY50-100/ton ($8-15/ton), marking the fourth consecutive days of price cuts. Sellers are reportedly become more flexible in negotiating deals with customers and prices at the lower end of the overall price range do attract purchases, though most cargoes takers are traders. A domestic trader reported, “Our manufacturing customers are not showing much interest at the new offers despite we are open to negotiation as some claimed seeing no improvement in end product business. Together with the start up of a new coal based plant this month end; outlook for the first half of August is rather cloudy.”

In the import market, offers for mainstream homo-PP cargoes have not witnessed any abrupt movement in spite of market rumours about seeing some cargoes at visible reduction compared to yesterday. A trader from Zhejiang offered Saudi Arabia homo-PP at $1040/ton, BWH China, TT in advance said, “Buyers prefer to wait and see, which results in very disappointed sales results this week. We are also waiting for new offers from our Omani supplier as they have restarted production after scheduled turnaround. This means supply is deemed to improve.”

Irregular origins for PE from Uzbekistan, Brazil and Mexico continue to emerge in China in spite of sluggish purchasing activities. As reported earlier, players are expecting a considerable quantity of imported PE material, especially HDPE film to arrive the market end of this month to beginning of next month, from which buyers are having strong motivation to adopt wait and see attitude.         

In Southeast Asia, sentiment in the import PP market started to show a clearer sign of a slowing down as major Middle Eastern producer concluded deals for homo-PP at lower levels compared to earlier this month and set the market on a stagnant stage. A trader purchased 100 tons of this cargoes at $1040/ton CIF Vietnam, a $10/ton lower than the last purchase two weeks ago and some $30/ton below the offer levels said, “Other suppliers are still maintaining firm stance on their cargoes; yet we think this is not sustainable as it seems the market has hit the ceiling for now. Prices might move lower in the coming week, hence we would only buy small quantity.”

Meanwhile, Indonesian PP market remains relatively healthy though buyers have portrayed a certain degree of resistance towards the current domestic offers. A converter reported receiving prices for local homo-PP cargoes at $1340/ton FD Indonesia, excluding VAT, cash term said, “We are still holding inventories for another one and a half months, therefore we are not in rush to make fresh replenishment. We think the current offers are too high while our end product demand is rather mediocre, for this we prefer to hold wait and see stance.” Many players are expecting weaker international ground and the arrival of previous purchased cargoes would ease the current situation in the coming month.

Regional PE market remains waiting for major Middle Eastern producers to announce fresh prices; yet most expected a reasonable increase for LLDPE film cargoes given limited availability. A buyer commented, “We think market might see some $40-50/ton higher on August delivery PE cargoes compared to July; however, attempt to implement higher hike would prove to be unworkable as buyers are resisting prices at the upper end of the overall price range at the moment.”

Re-export Middle East LLDPE film cargoes from China to Vietnam appears to catch less than expected buyer’s attention, from which supplier decided to step back on their offer by $10/ton from yesterday to reach $1225/ton CIF Vietnam, LC AS term.

Players in the region have also paused their purchasing activities to monitor the impact of Turkey put the country on three months state emergency after failed coup last weekend. A producer active in exporting to Turkey market said, “We are not very sure about any restriction in maritime transportation, however demand for end product might suffer from falling economic activities. This might indicate that producers might need to scout for other markets to cover the excess quantity.”

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