Asia Daily PP and PE Overview 17 Jan 2017

In China, futures market flipped the trend to trade at the red zone throughout the day. Contract 1705 for PP concluded at CNY72/ton ($10/ton) lower at CNY9023/ton ($1112/ton without VAT). LLDPE futures lose CNY95/ton ($14/ton) to close at CNY10130/ton ($1255/ton without VAT).

In contrast, trading activities in local market remains steady as some buyers continue to make pre-holiday replenishment. Players in the country believed that market outlook in March in rather optimistic considered the peak maintenance shutdown season in quarter 2 of the year and the delay of most USA cargoes. This has triggered interest for deep-seas parcels, though buyers are negotiating very aggressively. A Ningbo based trader said, “We are looking for some homo-PP cargoes to arrive in March as we believed that buyers return from the long holidays would need to make fresh purchases. Our Middle Eastern supplier is very firm on their cargoes at $1070/ton CFR China and we are seeking for more competitive prices in the market.”

A trader sold USA HDPE film at $1110/ton CFR China, LC 90 days term added, “Trading activities are fading gradually and looking at the purchasing tempo this week, we do expect domestic supply to pile up. On the other side, converters are not holding high inventories and it is just the matter of time that converters would need to return to secure necessary quantity. At the moment, prices near the $1200/ton are not attracting any buying interest.”   

In Southeast Asia, more regional producers started to open February offers for both PP and PE, mostly at stable to firmer levels compared to the previous price announcement.

Buyers appear to be less resisting to higher LDPE film prices given couple of major plant shutdowns that tightened the general supply and the fact that firmer import prices have been translated into increases in local ground. Indeed, traders in Vietnam and Indonesia both reported a surge in domestic offers for LDPE film. A Vietnamese trader lifted locally held Thailand LDPE film prices by VND600,000/ton ($27/ton) said, “Malaysian origin offers are way higher than our cargoes. There are very limited materials available in local market at the moment and this condition might prolong in the coming month since cargoes arrival are not sufficient.”

In the import market, after a major Saudi Arabia producer open new PE prices to the region at diverged trend, players are not very active in placing bid. “It might take up to three months for the cargoes to arrive this time, which is too risky. While LLDPE film supply in local market remain tight, we prefer to source more prompt parcel instead,” an Indonesian buyer informed.

In the PP market, a series of plant shutdown within quarter 1 that resulted in an estimated production loss of more than 100,000 tons has boosted very bullish expectation amongst suppliers. For this, couple of traders decided to firm up offers for Saudi cargoes to Vietnam by approximate $30-35/ton compared to last week. A buyer received Saudi homo-PP offer at $1080/ton CIF, LC AS term, some $35/ton increased from the done-deal reported last week. The source said, “Or supplier informed that this cargoes are arriving soon, however, we are not ready to accept such rapid price increment.”

Players are pointing to the uncertainties market poses at the current global economic and political condition. Market strongly concern over the possible policies changes by the USA’s new president that might hurdle the trade flow. Not to mention that Chinese government is planning to tighten monetary policies in 2017 and extend effort to prune excess industrial capacity, which in turn might cause a slower growth. “Therefore, it would be safer to confirm end product orders first before committing to new raw material purchases,” a buyer commented.