Asia Daily PP and PE Overview 21 Oct 2016

In China, futures prices on Dalian Commodity Exchange see little changes on the final trading day of the week. Contract 1701 for PP inched up CNY17/ton ($3/ton) while LLDPE contract lose CNY10/ton ($1/ton). Both contracts settled at CNY7877/ton ($996/ton without VAT) and CNY9485/ton ($1199/ton without VAT) respectively.

Domestic spot offers for both PP and PE increased by CNY50-100/ton ($8-15/ton) from yesterday with the support from futures trading. Demand however is reported to have weakened significantly and buyers are now on the sideline after sufficient replenishment. Yet, players are not expecting any price reduction in the near term considering the lack of inventories pressure from the seller’s side. A trader commented, “Converters are not holding high inventories on hand, which means continuous replenishment is necessary. Cargoes from Indian supplier might become limited due the upcoming shutdown, and for this, we believed that PP market could continue to inch higher in the near term.”

In the PE sector, there are little changes except that LDPE film extended the firming trend due to persistent supply tightness condition. “Both local and overseas suppliers are attempting to push prices higher and we fear that market is nearing to a turning point as previously purchased cargoes would arrive and ease the current condition to a certain extent.”

In Southeast Asia, the general sentiment is still heavy though regional sellers are stepping up effort to stimulate buying interest. There are only few suppliers have announced fresh prices at slightly higher levels than previous opening, indicating difficulties sellers faced in catching up with the latest development in China. A Vietnamese buyer received Middle Eastern PE offers at $1190/ton for LLDPE film and $1135/ton for HDPE film, which are $10/ton increased from last month, based on CIF Vietnam, LC AS term, commented, “We think this LLDPE film offer is very competitive as it is hard to find prices below the $1200/ton benchmarks at the moment. We plan to purchase some LLDPE film quantity but not HDPE. Demand for HDPE film in local market has been really weak and we are not able to make any profit recently. There might be some spillover effect from LDPE and LLDPE film, however we do not expect HDPE film prices to increase significantly.”

Meanwhile, traders in Vietnam are lifting their domestic offers, especially for LLDPE film by approximate VND200,000/ton ($9/ton) and it appears buyers have accepted such price increment. A trader added, “Actual supply for LLDPE film in domestic market is still not very comfortable while we are selling all high costs cargoes at minimal margins now. Our Middle Eastern suppliers have given higher indication for the next offering, hence we think domestic market could increase further in the coming week.”  

In Indonesia, suppliers remain disappointed towards the state of demand for PE in spite of stronger sentiment observed in other regional markets. In the PP sector, demand for homo-PP injection is reported to be healthier than yarn grade though official offers from domestic producers has yet to show increment. A trader said, “We are trying to hold firm on our prices without giving large discount. On the other hand, customers only buy on need basis as doubt over the sustainability of the current firming trend overshadowed other concerns. We see domestic supply up to this point is still comfortable, hence sellers are putting effort to clear inventories.”