Asia Daily PP and PE Overview 05 Oct 2016

In Southeast Asia, there are more trading activities today compared to the earlier session with the presence of more import offers from international suppliers. Couple of international makers have attempted to increase their homo-PP offers to the region as reported earlier.

Indeed, Vietnamese buyers received latest prices at $20/ton hike compared to late last month, touching $1030/ton CIF Vietnam, LC AS term. Initial market respond is not as positive as expected, especially local traders, who are showing little interest in replenishing additional cargoes, claiming unusual weak domestic demand. A trader commented, “We think converters might accept to replenish material at rollover prices, but traders are placing bid at much lower levels. We are still receiving competitive offers from Fareast Asian suppliers this week. We have more than sufficient cargoes on hand, hence no plan for additional purchase for now.” It is also reported that a good number of previously purchased cargoes are due to arrive in the near term, which might further pressurize local ground if demand does not pick up.

Meanwhile, demand in Indonesia shows little improvement and several traders are offering homo-PP cargoes at well below the producer’s price list. Many converters claimed to have sufficient inventories till mid November, from which need for immediate replenishment is minimal. This explained to why import homo-PP to Indonesia fetches very little buying attention. A converter informed, “We are comfortable with out stock, therefore we did not ask for any offer.”

In the PE market, most offers observed on the stable track, except some Middle Eastern LLDPE film cargoes (Mi 1) are offered at slightly discount. “This is not unusual as LLDPE film Mi 1 grades are not widely used in Vietnam. Our customers informed that they have purchased sufficient cargoes, hence not interested in these parcel. Mi 2 grades are unchanged at $1180/ton CIF Vietnam, LC AS term,” an international trader said.

Domestic LLDPE film in local Philippines also recorded impressive hike of PHP3000/ton ($62/ton), which players attributed to the depreciation of the peso. A market source informed, “Customer are not very aggressive in making purchases though the preparation for the upcoming holidays season should be taking place any time now. Supply for LLDPE film in local market is a little bit tight, and this also plays an important role in the recent price increment. We think the sentiment would improve once the monsoon is over.”

In Plant Status news, Shell might restart its Singapore based naphtha cracker in the next few weeks based on the company’s latest assessment. Shell unexpectedly shut down the cracker last week after experience some issues at one of the compressors. Market players were initially expected the shutdown to last several months. The unit can produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.