Asia Daily PP and PE Overview 13 Sept 2016

In China, futures prices on Dalian Commodity Exchange have yet to recover from a weeklong falling. Contract number 1701 for PP only inched up CNY6/ton ($1/ton) from yesterday and settle at CNY7096/ton ($908/ton without VAT). LLDPE futures continue to move south, slashing another CNY70/ton ($10/ton) to close at CNY8745/ton ($1119/ton without VAT).

Spot PP prices in domestic market fell four sessions in a row today, accumulating a total reduction of CNY250/ton ($37/ton) since last Thursday due to slower trading activities ahead of the Mid-Autumn Festival. Meanwhile, LDPE film prices added another 50-200/ton ($8-30/ton) on healthy buying interest.

It is reported that buying interest is diminishing and converters only purchase hand to mouth basis with concern over the medium term outlook. Indeed, most plants affected by the G20 Summit are on schedule to restart this week. In addition, two new coal based plants to start trial run by end of September and if successful, local supply might increase by quarter 4. Shenhua XinJiang Coal-based New Materials Project with capacity of 450,000 ton/year coal-based PP and 270,000 ton/year coal-based PE (LDPE) and Zhongtian Hechuang Co Ltd, which produces 700,000 tons/year of coal-based PP.

There is little movement in the import market except the arrival of previous purchased HDPE blow molding cargoes that might weight on sentiment in the near term. “We have 2000 tons of Iranian HPDE blow molding to arrive end of this month and we are offering at $1085/ton CFR China, LC AS term. Unfortunately, the cargoes fetch little buying interest. Several other cargoes are also due to arrive the same time, which worried us a little.”

In Southeast Asia, Indonesia and Malaysia markets have resumed working after the Eid-al-Adha holidays; however trading activities remain slow. Several overseas suppliers have announced fresh homo-PP offers to the region at mostly stable to soft levels. Indeed, a major Saudi Arabia producer rollover their homo-PP prices to Vietnam at $1025/ton CIF term and several deals are reported at $10/ton lower. A buyer informed, “We only purchased 50 tons since we have skipped the last two week. Local demand is very weak and we see not many buyers are eager to replenish material at the moment. We are concern about the near term outlook because if demand is not improving in the coming week, market might be dragged down sooner than expected.”

Meanwhile, a major Thailand producer down adjusted their homo-PP prices to Indonesia by $10/ton compared to last week to reach $1130/ton CIF Indonesia, LC AS term. Despite the reduction, it is reported that demand in Indonesia is weak at the moment, from which a major local producer has also reduced their prices by approximate $20/ton today. A buyer informed, “We are really surprised with such price cut as supply is tight here. Our local suppliers are actively calling us these few days, however, we have already replenish sufficient material. We prefer to monitor the market further though it appears to us that market has hit the peak.”   

The regional PE market witnesses little changes though demand for PE film in Philippines remains on the limelight. Buyers here are preparing for the holiday season ahead while LLDPE film supply is tight. A trader informed, “Middle Eastern LLDPE film offers are still above the $1200/ton threshold. The only issue for traders is that locally held imported cargoes are facing stiff competition as domestic producers are putting effort to defend market share instead of market prices, squeezing profit margins.”

It is also reported that LLDPE film supply in local Indonesia market is tightening due to technical issues at major producers’ plants in previous week. However, it might take the market a little more time to see the effect since buyers are still reluctant to replenish cargoes at the moment.