Asia Daily PP and PE Overview 12 Jan 2017

In China, futures prices continue to firm up. May delivery contract for PP edged CNY133/ton ($19/ton) higher to reach CNY8742/ton ($1077/ton without VAT) while LLDPE contract only added CNY10/ton ($1/ton) from yesterday to reach CNY9825/ton ($1210/ton without VAT).

With the support of firming futures trade, domestic spot offers for both PP and PE also increase CNY50-100/ton ($7-14/ton) from yesterday. It is reported that the general sentiment has pick up, although buyers are not very aggressive in scouting for cargoes. Buyers in northwest area are more active in replenishing LLDPE film cargoes ahead of the traditional high demand season for mulch sheet, while eastern buyers are keener to stock up homo-PP. A trader commented, “Sales in local market is better today, yet it is still much below our expectation. Our customers are less willing to keep high inventories like they did in the previous year saying that raw material prices are still too high. This might point to a better replenishment activities after the holiday.”

In the import market, there are rumours about Uzbekistan homo-PP concluded at below $1000/ton threshold CFR China term. While there are opinions that these cargoes are non-prime grade; this information is not confirmed at the time this report is published.

Meanwhile, there are several deals for Middle Eastern homo-PP at $1040/ton CFR China, LC 90 days term. A trader sold the parcels informed, “These are prompt cargoes. We are also having some deep seas cargoes offered at the same level, however buyers are not very interested. It seems that buying interest in Southeast Asia is much better than China recently as local prices here are very competitive.”

Deals for import HDPE film is also not too disappointed. A trader sold Egypt’s HD film at $1115/ton and Thailand’s HDPE film at $1165/ton CFR China informed, “Thanks to strong local prices, our customers are still showing interest for import cargoes. We think market is getting quieter in the coming days. And local delivery costs have surged about $5/ton this week.”

In Southeast Asia, there is no significant pick up in trading activities, as buyers remain reluctant to make large purchases at the current market levels. Import Middle Eastern homo-PP priced above the $1050/ton threshold are facing strong resistance and it appears that most deals concluded at no higher than this mark. Indonesian buyers reported to have received Middle Eastern homo-PP at $1070/ton CIF, LC AS term with a cement bags converter commented; “We bid for $20/ton lower, in line with other cargoes from same origin. The construction sector has been weak since the final quarter of 2016 due to lack of government funding; affecting our end product business negatively. However, we hope to see improvement in the near term. We are not planning to make purchases at prices higher than our bids.”

Meanwhile, a major Saudi Arabia producer reported to have sold about 1000 tons of homo-PP to Vietnam in earlier trading day at $1045/ton, some $25/ton reduction from initial prices. A distributor commented, “We are requesting for additional quantity since the number of purchase inquiries we received is still good. Yet buyers are requesting for the same price level.” Vietnamese players also reported softer local market as domestic traders release on hand cargoes due to healthy margins. In addition, the latest development in the import market has had many players concern over the market prospect in the near term.

In the regional PE market, February shipment offers might be announced in the coming days with initial expectation call for a more of stable trend from last month. Meanwhile, a Thailand producer has attempted to increase their HDPE prices to Vietnam to reach $1190/ton for yarn and $1185/ton for film, all based on CIF, LC AS term. Market shows mixed respond toward the new offers. While some believed that HDPE prices are due to firm up given lack of availability in local ground; others are not seeing the support from demand side.

On the other hand, local traders in Indonesia take an unexpected move to slash their HDPE film offers in Central Java area of the country despite clearer signs of improved demand condition. A buyer commented, “This is very surprising since most Middle Eastern makers are not offering large quantity these days.” It is also reported that major local PE producer has achieved on-spec LLDPE film cargoes this week after several weeks dealing with technical issues.