Asia Daily PP and PE Overview 11 Oct 2016

In China, futures prices strike the second straight winning session today, adding three digits gain. PP futures for January delivery jumped CNY167/ton ($25/ton) to reach CNY7662/ton ($976/ton without VAT) and LLDPE contract increased CNY210/ton ($31/ton) to close at CNY9285/ton ($1183/ton without VAT).

With full support, domestic producers continue to lift local PP and PE prices today. Indeed, spot PP added CNY50-200/ton ($8-30/ton), LLDPE leaped CNY200/ton ($30/ton) while LDPE film also increased CNY100-300/ton ($15-45/ton). On the other hand, it is reported that the strong buying interest observed in the past three days is now ebbing, yet market is not expecting any price cut in the coming days as sellers are free of sales pressure. A trader in Beijing commented, “Our customers have mostly replenished sufficient material hence showing little interest in higher prices. This is very unhealthy for the sustainability of the current firming trend.”  

In the import market, LLDPE film prices are $20-30/ton higher than the pre-holiday period. A trader sold Saudi Arabia LLDPE film at $1200/ton CFR China, LC 90 days term informed, “We lifted our prices by $30/ton from Saturday due to healthy local demand. We are quite satisfied with the trading activities since the market resumed, yet we are not confident about the possibility of further price hike. We would continue to monitor market development before making decision.”

Another trader active in the import PP area added, “We have sold a good quantity of Saudi Arabia homo-PP at $960/ton yesterday and currently monitoring further marker development. Traders without sales pressure are holding very firm to offers at $1000/ton, yet deals are very slow. We think import ground might see more activities in the coming days with the current condition in the domestic ground.”

In Southeast Asia, domestic Vietnam market has actively responded to the surging energy values and healthy demand in China, in which players reported a sudden increase in the number of enquiries from local buyers, especially for homo-PP and LLDPE film cargoes. For this, locally held PP and PE offers have inched up slightly compared to last week. A trader commented, “Our customers are asking for offers but also very vigorous in negotiating for discount. We couldn’t increase our offers too much and this might persist in the near term.” Meanwhile, other traders in the country are very optimistic about the market prospect and that prices might increase in line with better number of purchase inquiries.

Import PP to Vietnam also edged up $10/ton from last week and offers below the $1000/ton threshold has technically disappeared now. Buyers have accepted to make purchases at the price levels above this marks, though the number of deal is still limited. Meanwhile, there is little movement in Indonesia market and buyers become even more reluctant to take position after observed inertia buying interest in China market today. However, suppliers are holding very firm on their cargoes with the support from the general firmer trend in the international ground. A trader informed, “Demand for PP is still better than PE at the moment. We refused to commit to any further discount and we believed that buyers would eventually accept higher prices.”

There are also very limited number of new import PE offers to the region though it is heard that Middle Eastern LLDPE film prices has surged above the $1200/ton again. A regional buyer informed, “We refused to accept such high prices as we have already purchased at $1160/ton in the previous week. In addition, we are unsure about the sustainability of the current firming trend, hence we prefer to take cautious stance.”