Asia Daily PP and PE Overview 23 Jan 2017

In China, Dalian Commodity Exchange concluded the first trading day of the week on firmer note with contract 1705 for PP leaped CNY163/ton ($24/ton) to reach CNY9190/ton ($1147/ton without VAT). LLDPE contract meanwhile added CNY85/ton ($12/ton) from last session to reach CNY10325/ton ($1288/ton without VAT).

Despite stronger futures trading, there are little movements in the spot market in the absence of buyers. Many contacted by CommoPlast today are no longer in the office and travelling for Lunar New Year holidays. Trading activities therefore are heading for mute in the coming couple of days. A trader in Hebei informed, “The price gap between futures and spot market is now CNY300-400/ton ($44-58/ton), which is a good arbitrage opportunity for traders. Therefore, we still managed to conclude some PP and LLDPE parcels today, just that very few converters are available to make purchases at the moment.”

There are very limited numbers of new offer observed in the import market, mostly at stable to firmer levels. Players are expressing relatively bullish expectation for the post holiday outlook pointing to limited supply for both PP and PE. It is reported that many USA cargoes purchased previously are delayed to arrive until second half of April this year. These shipments were initially scheduled to arrive in February, the time market might be weak as buyers are not returning to their desks after the long holidays, and now become a relief that the impact on the supply condition might be moderated as cargoes arrive in later date.  

In Southeast Asia, buying interest across the region remains relatively unchanged from the previous week, however the sentiment continues to escalate on supplier’s effort to increase prices.

In fact, a major Singaporean producer has up-adjusted their PP offers for February shipment today from initial prices announced last week. The maker’s latest prices indicated $20/ton hike on homo-PP cargoes to reach $1160/ton CIF Southeast Asia, LC AS term. A distributor source informed, “We received good respond from market players after new offer announced last week. Our principal supplier is not having any inventory pressure at the moment, which support such adjustment. Besides, customers who are not confirming purchases by the given due date of 31 January, the supplier would withdraw the cargoes as inventories. Post Lunar New Year holiday outlook appears to be very positive.” There is no adjustment on LDPE cargoes from the producer.

Meanwhile, major Thailand producers have also lifted their homo-PP offers to Indonesia by $10/ton from last week claiming lacking allocation and bullish outlook. An international trader offers Thai’s homo-PP at $1240/ton CIF Indonesia, LC AS term commented, “Our offers are higher than other Southeast Asian cargoes, however, regular buyers are still considering to make purchases given tightening availability ahead of the maintenance shutdown season.”

The regional PE market is boosted by the surging ethylene costs, which is supported by tightening regional supply amid cracker shutdown season and healthy demand from downstream derivative markets. Ethylene costs based on CFR Northeast Asia jumped $60/ton on Friday to reach four months high while CFR Southeast Asia value added $30/ton. International PE suppliers therefore hold very firm stance on the their cargoes, refused to give large discount despite resistance from buyers’ side. A Vietnamese buyer received Saudi’s LLDPE film at $1230/ton CIF, LC AS term said, “We placed bid at $1190/ton and yet our supplier insisted on deal at above the $1200/ton threshold. We are not very confident in making purchases at such price as domestic supply remain comfortable and prevent prices from firming up.”