Asia Daily PP and PE Overview 04 Oct 2016

China market is officially off for National Day holidays from 1-7 October 2016. Trading activities shall resume by 8 October 2016.

In Southeast Asia, there is no significant improvement in demand observed in the region as the week proceeds. In contrast, persistent sluggish buying interest and falling ethylene costs have evoked even more caution amongst buyers, which in turn, putting tremendous pressure on the other end of the market – suppliers. Several Middle Eastern producers have already down adjusted or considering to cut their offers for October delivery cargoes to speed up sales. A Vietnamese buyers said, “We were offered Saudi Arabia LLDPE film at $1180/ton, some $40/ton lower than earlier last week, but we decided not to buy as domestic market is very slow. We fear of further reduction in the near term if demand condition does not improve.”

Another producer, whose LLDPE film offers stood at $‎1170-1180/ton CIF Southeast Asia, LC AS term last week commented, “We have yet to announce new prices this week. One thing is that demand is very weak in Southeast Asia. We were hoping that stronger energy values and unexpected shutdown at one of the crackers in the region would support the sentiment; however, if this condition persist, we might need to implement measures to entice demand.”

It is interesting that local PE prices in Malaysia continue to escalate, and in fact this is the only market in Southeast Asia where domestic PE offers still on the firming trend this week, thanks to the upcoming shutdown at one of the major maker’s plant. A converter received LLDPE film and HDPE film offers from a domestic producer at MYR100/ton ($24/ton) increased compared to last month said, “We could not afford to buy full allocation at the latest prices, therefore we only purchase minimum quantity this time. Our end product demand is very weak, hence the need for raw material has also reduced.”

There are very limited numbers of new PP offers reported in the market, especially from Middle Eastern suppliers. It is reported that major international traders are postponing their new price announcements after completed sales in the previous week, and monitoring further development before setting the next offer. Couple of producers have indicated their intention to lift homo-PP offers to the region, yet market response does not seem very supportive. An Indonesian trader commented, “Our regular customers are not very aggressive in replenishing material claiming sufficient stock. We think market might remain on the stable track in the coming days and any attempt to increase price at the moment might face intense resistance.”