Asia Daily PP and PE Overview 16 August 2016

In China, futures prices on Dalian Commodity Exchange inched down again after tow straight winning session, signalling volatility is here to stay. January delivery contract for PP edged down CNY34/ton ($5/ton) to reach CNY7458/ton ($960/ton without VAT). Same contract for LLDPE dropped CNY75/ton ($11/ton) to settle at CNY8910/ton ($1147/ton without VAT).

Domestic spot offers defeated weaker futures trading to move north, adding CNY50-100/ton ($8-15/ton) on both PP and PE cargoes. Though buying activities are not as strong as expected, domestic traders claimed achieved moderate number of deals today. Players are also expecting to see a more of stable to firmer price levels from local producer in the coming days given lack of sales pressure. Indeed, private data showed that total polyolefins inventories at major producer’s warehouse have dropped by approximate 4.5% yesterday.

A trader in Zhejiang informed, “We received good number of price inquiries but deals are not as great. Our customers in the agriculture film sector are very cautious in their purchases despite low availability for LLDPE film material. Comparing to import LLDPE film from regular origins, domestic cargoes now are more competitive whipsawing buyer’s decision making.”

Meanwhile, there is little movement reported in the import PP market and mainstream cargoes are capped at $970/ton CFR China, LC 0-90 days term. Sellers refused to commit further discount as long as domestic markers holds firm stance as import homo-PP to China at the moment is technically more competitive than locally produced cargoes.

Import LLDPE film and LDPE film to China has firmed up slightly compared to earlier this month, in contrast HDPE prices turn south. A Qatar maker announces new LLDPE and LDPE film price to the country with $20/ton increased, with a market source informed, “Our supplier appears to have minimum sales pressure at the moment, however we worry our customers might show resistance toward such high prices. We also received offers for other Middle Eastern cargoes at slight lower prices, and we only purchased a small quantity.”   

In Southeast Asia, after cutting import homo-PP prices to the region at the beginning of the week, sellers claimed continue to achieve healthy sales today, and in fact, several have sold out available quantity. A distributor offers homo-PP injection on behalf of a Saudi Arabia producer at $970/ton CIF Vietnam, LC AS term said, “We have sold out the final 500 tons allocation today while many buyers are still asking for material, especially yarn grade. We believed that market is very near to the bottom considering the strong buying interest and firming upstream costs.”

Over the past two weeks, Vietnamese buyers have purchased a considerable quantity of homo-PP cargoes, mostly deemed to arrive the market by late October to November 2016. Players here are expressing mixed opinions regarding this matter with some are hoping that year end festive season would boost demand by the time these cargoes arrive, while other are foreseeing another round of local prices cuts due to surge in supply.

Meanwhile, Indonesian players reported receiving Indian homo-PP offers at $20-30/ton higher than last week reaching $1010-1030/ton CIF Indonesia, LC AS term. Prices at the upper end of the overall price range in contrast, are facing downward pressure, indicating that market is pursuing negotiation to obtain further discounts on deals. Purchasing activities remain low, players reported.

The regional PE market has gained some support from firming ethylene costs, however buyers’ confidence has not shown any significant improvement, especially for HDPE film. Meanwhile, the approaching agriculture film season is fueling more optimistic expectation among players for LLDPE film and LDPE film sector in the coming month. A regional buyers said, “We think September would poses better market condition as this is traditionally the start of the high demand season from flexible packaging sector. And with the number of crackers shutdown during this period, stronger ethylene cost might support stable to firm prices.”

On the other side, demand for PE in local Indonesia market continue to disappoint many sellers with a major producer informed, “Buying interest is very weak for PE when compared to PP; hence we might continue to export some of our cargoes to nearby markets with hope to achieve better margins.”

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