Asia Daily PP and PE Overview 20 Jan 2017

In China, futures prices rebounded on the final trading day of the week. May delivery contract for PP added CNY122/ton ($18/ton) from the previous session at CNY9028/ton ($1122/ton without VAT). LLDPE contract increased CNY145/ton ($21/ton) to reach CNY10265/ton ($1275/ton without VAT).

In local market, the holiday mood is intensified and trading activities are diminishing in a faster pace than it is expected. Many logistic companies have announced final working day today before the holiday started, making it difficult for delivery even with deal achieved. Traders, who are active in both local and futures market continue to pursue pre-selling cargoes for post-holiday delivery in order to secure a safe cash flow after heavy speculation on futures market previously. A source informed, “We are offering homo-PP at CNY200-300/ton ($29-44/ton) lower than market level in the past few days, however, our buyers are not very enthusiastic as most have entered the holiday mood.”

A trader in Ningxia is struggling to find buyers for 400 tons of material the source is having on hand. The trader commented, “We decided to hold the cargoes for post holiday because there is no truck available at the moment for delivery.”

The remaining traders in the market are raising concern over the supply condition in the post holiday period as domestic inventories are piling up in addition to the arrival of imported cargoes, which cause port congestion this week. Hope for healthy replenishment activities in the second half of February remain strong.    

In Southeast Asia, market is quieter on the last trading day of the week as most buyers have completed placing bids for the new shipment and await supplier’s feedback while other reportedly made sufficient replenishment. Regional players maintain positive expectation for the PP trend in the coming month pointing to tightening supply condition; yet, many buyers are tagging conditions along their view. A regional buyer commented, “Market sentiment might loose steam if Chinese buyers return with weak buying appetite. And before the state of post holiday demand is confirmed, we think suppliers might attempt to keep their prices on the firm trend, unless expectation turn otherwise.”

On the other side of market, suppliers have confirmed their intention to hold firm stand on their cargoes. An international trader offers Saudi’s homo-PP at $1080/ton CIF Indonesia said, “We don’t have large quantity on hand and so other traders. If buyers were to secure needed quantity, purchasing activities must be sped up.”

The regional PE market sees little changes in term of buying interest though it does appears that suppliers are attempting to keep their LLDPE film offers above the $1200/ton threshold. Buyers are not ready to accept the new level and continue to put pressure on deep-seas cargoes.

In addition, another major regional LDPE plant is due to shutdown within this quarter for maintenance work. Besides Qapco, Lotte Chemical Titan and Formosa; Thailand’s PTT is taking its 300,000 tons/year LDPE line off-stream for two week in March. This is expected to intensify the LDPE supply tightness condition.

Meanwhile, Indonesian players reported a total increased of IDR200,000/ton ($15/ton) this week on local HDPE film cargoes. A good portion of buyers reported to have made purchases at the new offer level due to better end product businesses. On the other hand, LLDPE film supply is set to ease in the near term, player said, as domestic production is stabilizing. A buyer informed, “A major local producer has been able to fulfill contract order for February delivery and spot market shall receive the quantity soon. The only issues is the lack of availability from Middle Eastern suppliers.”