Asia Daily PP and PE Overview 19 Jan 2017

In China, futures market softens again today with May delivery contract for PP slipped CNY101/ton ($15/ton) to close at CNY8946/ton ($1118/ton without VAT) while LLDPE contract loses CNY50/ton ($7/ton) to reach CNY10140/ton ($1267/ton without VAT).

Domestic spot market is loosing the heat as buyers have completed replenishing inventories and sellers continue to perform pre-selling cargoes for post holiday delivery at lower level, yet the cargoes pick-up rate is very low. A trader added, “Domestic inventories are piling up and in addition to the large imported cargoes arrival in the main ports; traders might face inventories pressure during the first half of February as converters might not return before the Chap Goh Mei celebration. There could be a possible price correction during this time.”

In the import market, players reported very slow purchasing activities after a Saudi maker announced fresh homo-PP prices to the country at $1050/ton in the previous trading day in spite of limited allocation. At the meantime, non-dutiable Philippines’s homo-PP offered at $1150/ton to the country and buyers are not responding very positively.

Another trader added, “We only managed to conclude some Middle East HDPE injection cargoes today due to supply shortage in local market though prices at the lower end. Other than that, demand for other film grades are technically stalled. Market has entered  the holiday mood.”  

In Southeast Asia, buyers mostly are still in negotiation for discounts after received fresh offers from regional and international suppliers. It appears that regional buyers are very reluctant with higher prices, however, doubts over the sustainability of the current trend is receding. More buyers started to plan to make additional purchases before further price hike emerges. An Indonesian buyer purchased Malaysian homo-PP at $1160/ton CIF, LC AS term informed, “The supplier agreed to $10/ton discount from initial prices and we decided to build up stock for March. It appears that tightening supply would continue to push prices higher in both local and import market in the near term.”

Meanwhile, another medium scale converter in Vietnam reported to have replenished sufficient PP cargoes for production until mid-April this year, and is now planning for additional cargoes off-take with the source explained, “We think prices are having very few chances to drop significantly in the firs half of the year and we are considering to buy just a small quantity before the holiday start.”

Meanwhile, a major Saudi Arabia maker rollover their homo-PP offers to Vietnam this week, however, several deals are reported at smaller discount compared to the previous closing, resulted in $15/ton hike week on week basis. A buyer purchased 50 tons cargo at $1060/ton CIF Vietnam added, “The supplier only has 200 metric ton of material this week due to an on-going plan shutdown and we have no choice but to accept the hike. Many other buyers are unable to obtain any quantity.”

The regional PE market is holding very firm and it appears that suppliers are willing to conclude smaller deal but with only minor discount from initial offers. A Vietnamese buyer received Korean LLDPE film at $1210/ton CIF, LC AS term said, “Our supplier refused to give any additional discount and this is too high for local market at the moment.”

Players are also expecting reduced PE availability from Middle Eastern suppliers given a series of plant issues in recent week, which might keep the market steady in the near term. However, looking at the longer time frame, Asian PE market might still face pressure due to increased in overseas supply, especially from the USA and softer demand condition in China.