Asia Daily PP and PE Overview 10 August 2016

In China, futures prices on Dalian Commodity Exchange made a surprised down turn in the second half of today’s trading session, plunging three digits after two consecutive gains sessions since the week starts. September delivery contract for PP dipped CNY202/ton ($30/ton) to reach CNY8259/ton ($1061/ton without VAT). Same contract for LLDPE also dropped CNY160/ton ($24/ton) to settle at CNY9030/ton ($1161/ton without VAT).

Spot market during the first half session was reported to be stable to firm for both PP and PE cargoes, with traders claimed to conclude good deals for homo-PP. However, sentiment was dampened afterward as futures trading recorded a surprised overturn. A trader in Ningbo commented, “Local market just choke up and buyers technically stop buying to see what is next. Spot market has been steered primarily by the overly speculated futures market, and this is making business very difficult. Domestic traders therefore become less active in import ground as they are struggling with thin margins for sometime now. The near term outlook is just too cloudy.”

In the import market, it is reported that Indian homo-PP has been sold out at $970/ton, CFR China, LC 30 days term, and at the moment traders are reselling with $10-20/ton margins. Several deals for Saudi Arabia homo-PP cargoes are observed at $1000-1010/ton CFR China, LC AS term and a Shanghai based trader informed, “We can achieved the premium over other origins due to the promptness as most of these Saudi parcels are due to arrive by end of this month. Buyers are not very into deep-seas cargoes in spite of more competitive prices.”

Import PE to the country remains very firm with HDPE yarn is leading demand in the country. Film grades somehow still seeing subdue buying interest as most agricultural film makers in Northern China are still sourcing hand to mouth basis despite production rate has increased to around 60%. Players are hoping to see better condition as converter are lifting run rate gradually.      

In Southeast Asia, market remains relatively stable with limited number of new homo-PP offers from Middle Eastern producer observed. Indeed, most sellers are taking a break to settle shipment procedure for deals concluded last week while monitoring market development before announcing fresh prices. Indonesian buyers are showing interest in replenishing cargoes from import market after obtained discounts on non-dutiable cargoes. A converter in the country purchased Vietnamese homo-PP injection at $1090/ton CIF Indonesia, LC AS term informed, “We have stock up two months worth of inventories as we think market is nearing the bottom, and that room for further reduction is really limited. Just that our supplier refused to negotiate on yarn cargoes. Demand for our end product remains stable.” Several deals for Thailand material were also reported at $50/ton below initial offer levels, spark market speculation that supplier has met buyer’s acceptance levels.

In Vietnam, several international makers announced fresh PP offers at stable to softer levels compared to previous week with Uzbekistan PPH injection cargoes touches $995/ton CIF Vietnam, marking the second origin breached below the $1000/ton mark after the USA cargoes. This has had many traders disappointed as market was hoping for a more stabilize condition in the coming days. An Indian major maker has also slashed their offers by $15-25/ton week over week, to reach $1010-1020/ton CIF Vietnam, LC AS term. A buyer source informed, “The market is too volatile and it is really difficult to gauge the likely direction in the near term, therefore we feel insecure to replenish cargoes at the current condition. We think room for further reduction is minimizing, however plunging futures market in China might indicate a pessimistic outlook.”    

The regional PE market started to see some movement after a major Thailand producer slashed HDPE film offers to Vietnam to conclude deals at $1115/ton CIF, LC AS term. Source from the producer informed, “Together with HDPE blow molding, we managed to sell approximate 1000 tons of material in total. We have suspended our offers by now and considering to lift prices in the coming days; however, we have yet to set the final conclusion. Demand for HDPE blow is satisfactory due to the upcoming shutdown at one of the major Saudi Arabia plant.”

Players reported receiving official announcement from a major Singaporean producer that the company would suspend all LLDPE c4 production by Jan 2017. This therefore might give way for higher metallocene supply, in addition to a start up of the new 300,000 tons/year metallocene plant in Thailand in the same year.

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