Asia Daily PP and PE Overview 23 Dec 2016

In China, futures prices on Dalian Commodity Exchange ended the week on a soft note. May delivery contract for PP drop CNY209/ton ($30/ton) from yesterday to close at CNY8872/ton ($1091/ton without VAT). Meanwhile, LLDPE futures also edged CNY95/ton ($14/ton) lower to reach CNY9845/ton ($1211/ton without VAT).

In domestic market, PP traders are taking more significant step to stimulate trading activities, cutting prices as much as CNY200/ton ($29/ton) from yesterday. PE cargoes however only decrease CNY50-100/ton ($7-14/ton). It is reported that purchasing activities remain mediocre as the recent environmental control at Northern and Southern area forced a number of converters to adjust operating rate. Yet, traders are very optimistic about the outlook for first half of January.

“Buyers are just waiting for additional discount before making replenishment. Some of our regular customers have received end product orders for the whole of first quarter 2017. We believed market shall be better in the coming weeks,” a trader in Shantou said.

There is no drastic movement in the import market reported, especially on homo-PP cargoes. Traders are complaining about limited buying interest pointing to more competitive domestic prices amid weak local currency. A trader offered USA HDPE blow molding at $1100/ton CFR China, LC AS term informed, “There are not many customers turn up for this cargoes. Several are placing bid for $20/ton lower, however, we are in no rush to cut offers at the moment.”

In Southeast Asia, trading activities remain unchanged, however buyers appears to be convinced that prices are firming up and that a possible weakening trend is no longer in the perspective, especially for homo-PP. Buyers in Vietnam are searching for competitive price cargoes to make replenishment, believing that local supply would be tight after the Lunar New Year considering very limited cargoes purchased in the past few weeks. A trader received Saudi’s homo-PP at $1050/ton CIF Vietnam, LC AS term said, “We place bid for $20/ton reduction to take large quantity, yet our supplier refused to accept. Local market is firming up and we are recovering some of the previous losses caused by the exchange rate. We think it is very likely that the PP market would sustain the firm trend in the coming month.”

The only issue local traders are concerning about is the state of demand in February – right after the Lunar New Year. This is usually considered as slow season, yet a market source commented, “With several plants and major crackers shutdown, we think market would improve in March. Therefore, we plan to make some replenishment of deep seas cargoes if our suppliers agreed to our buy idea. There are only few suppliers announced new prices this week; we think market might be active again after the New Year week.”

In the PE market, Indonesian buyers are raising concern over a possible LLDPE film supply shortage in local market as one of the major domestic producers failed to stabilize its production after encountered unspecified technical issues last week. Most traders are holding back their cargoes claiming very limited availability while some are lifting LLDPE film offers by IDR200,000/ton ($15/ton) compared to last week. Converters are not very confident in scouting for cargoes at the moment given slack end product business. A buyer commented, “We are in dilemma whether to stock up material now as we are unsure if end product business could improve in the near term. We might monitor further development before making decision.”

In Vietnam, a Saudi producer again adjusted their January offers to the country for the third time this week. In the latest adjustment, the maker slashed the offers significantly compared to yesterday, bringing the prices to even lower levels than the first offering two days ago. A distributor informed, “We have sold some LLDPE film and HDPE blow molding cargoes at $1170/ton and $1100/ton respectively. Buyers are still bidding for HDPE film and homo-PP cargoes. However, our customers are not willing to accept prices above the $1040/ton for homo-PP. We would only get price confirmation by next week.”