Asia Daily PP and PE Overview 12 Sept 2016

In China, futures prices on Dalian Commodity Exchange surprisingly posted a large drop just on the first trading day of the week. Contract 1701 for PP to be delivered in January fell CNY127/ton ($19/ton) to settle at CNY7110/ton ($910/ton without VAT). Contract for LLDPE slid as much as CNY245/ton ($37/ton) to reach CNY8740/ton ($1118/ton without VAT).

Falling futures market has strongly affected the general sentiment in domestic spot market. Indeed, local producers elected to cut PP spot prices by CNY50/ton ($8/ton) and LLDPE film prices by CNY50-100/ton ($8-15/ton) from last Friday. However, LDPE film prices continue to increase CNY50/ton ($8/ton) on the back of limited supply and interestingly buyers accepted such hike. On the other hand, sentiment in China market might turn heavy in the next couple of days as buyers enter the holiday mood.

A PP converter purchased regular homo-PP yarn at CNY8000-8050/ton ($1025-1030/ton without VAT) based on EXW China, cash term said, “We have replenished sufficient material for the coming week, therefore we need not to make additional purchases in the coming days. We prefer to monitor further market development after the holiday before deciding on fresh cargoes in-take.”

As most Middle Eastern suppliers are celebrating the Eid al-Adha, there are no official new offers from this region. However, some traders hold Saudi’s homo-PP prices at $980/ton, CFR China, TT in advance term though encounter stiff resistance. Meanwhile, a Zhejiang based trader offer Saudi Arabia and Qatar LLDPE film at $1170/ton CFR China said, “Sales are very poor today. We heard other sellers are trying to push dutiable LLDPE film prices to above $1200/ton threshold and this might not be attractive to buyers at the moment. We think market has reached the ceiling, especially when futures trade are dropping continuously.”  

In Southeast Asia, market is rather quiet on the first trading day of the week while Malaysia and Indonesian buyers are away from their desks for Sacrifice Feast. There are very limited numbers of offers observed in the regional market and customers generally expressed a very conservative stance over the near term outlook. Propylene costs based on FOB Korea term surged $25/ton last Friday, reaching $845/ton – the highest level in nearly 14 months. However, this seems not sufficient to heat up the sentiment.

An international trader commented, “Our Middle Eastern principal suppliers are on holidays, hence we might not announce any new offer this week. Most of our regular customers have already replenished sufficient material in the past weeks; hence we see very little buying interest. This might prevent any significant price increment despite stronger upstream costs.”

It also appears that Philippines market has the strongest appetite for PE at the moment, as players here are in the mid of preparation for the holiday seasons ahead. Elsewhere in the region, there are very few deals reported. There has been unconfirmed news regarding some unexpected issues at one of the major crackers in Thailand, yet players in this market see little stimulation toward purchasing activities. A Thai trader informed, “Buyers are not willing to accept higher prices and we think market has little room to move up further. We are taking cautious stance in replenish stock while bearing in mind the uncertainties quarter 4 poses.”