Asia Daily PP and PE Overview 12 Oct 2016

In China, futures prices continue to firm up though the increasing pace has slowed down to a certain extend. If in the previous sessions, both contract PP and LLDPE for January delivery recorded three-digit hike, today PP only adds CNY26/ton ($4/ton) while LLDPE gains CNY50/ton ($7/ton). Both contracts settled at CNY7674/ton ($976/ton without VAT) and CNY9330/ton ($1187/ton without VAT).

Spot PP and PE price lists from local suppliers indicated CNY50-100/ton ($8-15/ton) increased compared to yesterday; however, ebbing buying interest has encouraged several traders to cut prices to destock on expectation of continued weakening demand in the near term. This has yet to be a major trend since most of domestic suppliers are still very firm on their cargoes with a market source informed, “There are some delivery issues between the Northeast China to East China (major coal based PP production hub to major PP consumption area). Some cargoes purchased before the holidays have yet to arrive, posing risk of production disruption to converters. We are not planning any price cut as we believed that support for further increment is still strong.”

In the import market, overseas suppliers continue to lift their LLDPE and LDPE film prices to China and in fact, both Thailand and Qatar producers have implemented the second hike today. A trader received Thailand LLDPE film at $1270/ton and LDPE film at $1300/ton CFR China, LC AS term informed, “Our supplier decided to implement further hike on LLDPE and LDPE film cargoes due to satisfactory sales in the previous session. We think buyers would accept the new offers in the current supply condition, especially for LDPE film cargoes. HDPE on the other hand attract very little buying attention despite softer prices.” It is interesting that Thailand LDPE film offer to China is now $80/ton higher than to Vietnam, which is very unusual.

Import homo-PP to the country is also very firm and offers below the $990/ton mark are becoming scarce. Players are expecting import homo-PP prices to hover around the $1000/ton benchmark in the near term. There is clearly a delay in market development between local and import ground.    

In Southeast Asia, there are little changes in the market condition as the week proceeds, especially in Indonesia, where domestic traders continue to give discounts in order to conclude deals. Traders in the country were attempting to hold firm on their prices with hope that better demand in China would generate some spill-over effect, however, persistent slow demand put their effort to vain. A trader informed, “Demand for homo-PP yarn is weak since our customers see no improvement in end product demand, hence taking cautious stance in keeping inventories. Domestic supply might be tightened in the coming days amid the scheduled shutdown at one of the major local plants during November. Yet, buyers are negotiating very hard and we have to commit to reduction to smoothen sales.”

In contrast, Vietnam market is responding very positively to the regional development in the recent day, which is reflected in more active trading condition. However, traders still find it difficult to increase their offers. A major local trader commented, “We plan to lift domestic homo-PP prices by VND200,000-300,000/ton tomorrow despite high possibility of buyer’s resistance. China market is very healthy since buyers resumed working and we think the support is solid enough to push prices up.”

The regional PE market sees very limited number of new offers as most suppliers claimed to have sold out October delivery cargoes and currently waiting to announce November shipment prices. Couple of traders are having remaining LLDPE film quantity to offer at unchanged levels compared to last week. A distributor sold Saudi Arabia’s LLDPE film cargoes at $1160-1170/ton CIF Vietnam, LC AS term said, “We only have 300 tons and sell out very quickly. We think market is on firming trend given stronger upstream costs and healthy buying activities in China.”

Meanwhile in Malaysia, a major local producer up adjusted all PE prices by MYR50/ton ($12/ton) today due to the depreciation of the Malaysia ringgit. The maker is also planning an annual turnaround in December, in which sales pressure is minimal, sources added.