Asia Daily PP and PE Overview 03 Nov 2016

In China, futures prices has regained stabilisation toward the end of the week with contract 1701 fluctuate in a smaller range. PP futures inched down CNY39/ton ($6/ton) to reach CNY8500/ton ($1075/ton without VAT) while LLDPE contract added CNY40/ton ($6/ton) at CNY10,035/ton ($1269/ton without VAT).

In domestic market, spot offers for PP, LLDPE and HDPE film have been down adjusted CNY50-100/ton ($8-15/ton) as traders attempted to attract buyers while LDPE film continue to jump CNY100-300/ton ($15-44/ton) higher than the previous trading session. Demand slow down visibly with a trader said, “Couple of our regular PP buyers decided to suspend production due to negative margins, resulted from continuous price hike recently. This is not a good signs to sellers. We offered some discounts today, but our customers are not showing much interest.”

Not only in the local market buying interest weakened; traders active in the import ground also complained about significant drop in purchase inquiries. “We keep our Saudi’s homo-PP offers at $1070/ton LC 90 days term since earlier this week, but respond is very poor these couple of days. Though we are not in rush to cut prices, we feel a little concern over the medium term prospect.”

The LDPE film fever in China also shows some early signs of a cooling down as buyers resisted the upper end of the overall price range while weakening futures market also impact the general sentiment. Players reported an approximate 20,000 tons of USA’s PE cargoes are being offered in China at the moment at the range of $1100-1120/ton for HDPE film and blow moulding and $1280/ton for LDPE film, all based on CFR China, LC 90 days term. A good number of deals have been reported for these cargoes at the time this report is published.    

In Southeast Asia, buying interest is weakening towards end of the week though prices are still on the rise. Regional buyers mostly claimed to have replenished sufficient stock, from which minimal purchases are needed at the moment. A household product converter in Vietnam informed, “We are fully covered till end of December, hence we are monitoring the trend now. We think that prices are very hard to increase further given rapid reduction in propylene (C3) costs and weak energy values.” It is interesting that homo-PP originate from USA is also showing up in Vietnam market at the level $1010/ton CIF, LC AS term, which is slightly lower than the mainstream offerings now.    

On the other hand, woven bags makers in Indonesia are complaining about drop in end product orders from both local and international customers. A source said, “We have secured sufficient material before domestic producer lifted homo-PP prices three time this week. We are not planning for additional purchases amid weak end product business.” Traders in the country have also confirmed a visible slow down in buying activities, which many blamed plunging upstream costs and unstable political condition to be the culprits.

Regional suppliers are holding very firm on their cargoes claiming lack of availability while having another option of diverting allocation to China provide even more support. Demand appears to be not very supportive at the moment, yet expectation for near term outlook is rather positive with upcoming shutdowns and pre-Lunar New Year orders in the picture.

In the PE market, major international suppliers have mostly sold out their November shipment cargoes and at the moment market seems taking a breath to monitor further development. A major Thailand producer, whose HDPE plant is scheduled to be taken off-stream this November for maintenance, in line with the shutdown at its upstream cracker, said, “We sourced some ethylene cargoes from spot market and would make a small quantity of HDPE film for December delivery. This will be mainly supplied to our regular buyers. It is year end, yet we see very little improvement in term of demand.”

In another news, Malaysia’s Lotte Chemical Titan decided to postpone the maintenance work at its petrochemical complex from December 2016 to February 2017, except one of the HDPE lines would stick to the initial plan, to be shut three week starting early December 2016. The cause behind this decision is still unclear, however, this might ease the LDPE market a little, players said.