Asia Daily PP and PE Overview 13 Jan 2017

In China, futures prices firmed up for the fourth session in a row, concluding the final trading day of the week with three-digits hike. May delivery contract for PP gained CNY139/ton ($20/ton) while LLDPE futures jumped CNY240/ton ($35/ton). Both contracts settled at CNY8881/ton ($1100/ton without VAT) and CNY10150/ton ($1257/ton without VAT).

As LLDPE futures has been taking the lead in the past couple of sessions, local traders started to implement larger hike on their spot cargoes for this grade. In fact, today’s prices indicate CNY100/ton ($14/ton) increased for LLDPE film and only CNY50/ton ($7/ton) firmer for PP cargoes. Purchasing activities remain on the same pace in spite of improved futures trading. The centre of demand this week focused on homo-PP, LLDPE film and HDPE, players said.

In the import market, traders are mobilising their homo-PP cargoes from futures to spot market, especially for USA origin, trading at below $1000/ton threshold for the first time in nearly two months. Couple of deals for these cargoes are reported at $980/ton CFR China, LC 60 days term. A trader received the offers commented, “There is no homo-PP yarn allocation, but only injection grade. Even with such low level, the supplier bears no loses given profit earned in the previous futures trading. Meanwhile, other mainstream cargoes are still above the $1000/ton threshold, though buying interest in a little weak.”  

USA’s HDPE cargoes emerged again at the level $1090/ton for blow moulding grade, however, buying interest is not there considering many of the previously purchased cargoes are delayed to arrive only in March. A trader offered the cargoes commented, “We are still collecting bid and initial respond is very disappointed. Market might turn mute in the coming week as buyer enter holiday mood.”

In Southeast Asia, there are very limited trading activities on the final trading day of the week. Players are mostly withdraw to the side-line after a round of replenishment in the earlier days to wait for more February shipment offers from international producers in the coming week. Outlook for both PP and PE remain firm though the period after Lunar New Year is usually weak. A regional buyer commented, “We have purchased sufficient material for the first quarter this year and we might only consider fresh replenishment next month if more discounts are available. The outlook for PP this year is rather firm with the support from crude oil prices besides the maintenance shutdown reported in this quarter.”

In fact, homo-PP supply within the region is expected to tighten in the coming month, in line with several shutdowns at major Southeast Asia and Middle Eastern plants. A Malaysian PP producer commented, “We shall skip mass offering for February delivery homo-PP as our supply is limited ahead of the annual turnaround. It is very difficult to attract buying interest in Indonesia recently as local cargoes are very competitive.”

Meanwhile, the regional PE market sees limited number of offers mostly at stable levels. Couple of Middle Eastern producer are complaining about lack of availability due to plant issues. An UAE producer commented, “Southeast Asia market is stagnant. Demand for HDPE film is not as strong as expected and we are taking time to deplete our availability. However, we are not having large quantity due to the previous technical glitches causing unexpected shutdown, therefore the pressure is not too high.”