Surging crude oil prices support Southeast Asian PP, PE market sentiment

Since the informal meeting OPEC held in Algeria late September 2016, from which the cartel agreed on a draft framework to implement modest production cuts in an attempt to stabilise the oil market, crude futures have escalated to the highest levels in nearly four months on Thursday, 7 October 2016. This somehow has lent support to the Southeast Asian polyolefins market over this week.

Regional players reported some improvement in term of trading activities across the market, though the numbers of deals concluded are not substantial. An Indonesian trader informed, “Local market has been really weak since July and this week we managed to conclude better number of deal, thanks to the sentimental support from the energy market.”

Meanwhile, in Vietnam, domestic traders are attempting to lift their locally held PP and PE cargoes to recoup the costs. A trader informed, “We do receive more purchase inquiries just these two days. Our customers bid Saudi Arabia LLDPE film at VND30,000,000/ton ($1220/ton without VAT), which is VND300,000/ton ($13/ton) higher than earlier this week. We refused to accept as our costs are higher. We think market might sustain the firming trend in the coming days given the current energy values. However, the sustainability remains a question mark.”

Meanwhile, many players prefer to wait for Chinese buyers to return from the National day holidays to have clearer market direction with a source commented, “The prospect of post-holiday demand in China is still uncertain, but we think buyers come back at the high side of the energy market would have some motivation to replenish cargoes. Hence, market has the support to sustain the stable trend in the coming week.”