Asia Daily PP and PE Overview 08 Feb 2017

In China, futures prices fell for the second session in a row prompting high level of caution among traders. Contract 1705 for PP slid CNY115/ton ($17/ton) from the previous trading day to settle at CNY9209/ton ($1144/ton without VAT) while LLDPE contract loss CNY190/ton ($28/ton) to CNY10225/ton ($1270/ton without VAT).

Falling futures prices has discouraged local trading activities with very limited number of deals observed. However, traders in the country appear to be preparing cargoes for March, as there is strong expectation that prices would increase in the coming month. Meanwhile, several traders are attempting to boost their liquidity position amid high inventories on hand yet buyers are absence. This explains to why re-export PE cargoes started to show up in Southeast Asia.

A trader sold Taiwanese HDPE and LLDPE film at $1210/ton CFR China said, “Sales are slow this week and we are holding firm on our cargoes hoping to see better demand condition next week. However, we are not able to replenish large quantity of material in the current cash flow position.”

It is also reported that a good number of LDPE film cargoes purchased previously have arrived main port, which might ease the local supply tightness in the coming days. As a result, domestic offers for LDPE film continue to inch lower, accumulating a total drop of CNY200/ton ($29/ton) since beginning of the week. An Iranian trader commented, “We are not as optimistic about LDPE film as for other grades and might take more cautious stance in the coming days.”   

In Southeast Asia, market sentiment appears to be calmer today as buyers have made some purchases and decided to withdraw to the side-line to monitor Chinese buyers’ respond to the latest market development before taking the next step. However, offers for both PP and PE continue to escalate.

Import homo-PP to Vietnam is reaching the new high level for this month and deals concluded also reported with increases. An international trader reported to have sold some Africa’s homo-PP yarn at $1125/ton CIF Vietnam, LC AS term informed, “We offer $10/ton discount from initial offers and only sell a small quantity. At the moment, we have withdrawn our prices from the market and might only open new prices again in the coming week.”

In Indonesia, both Vietnamese and Thailand’ homo-PP offers firmed up $10-20/ton from last week though buyers here are less active than the previous sessions. Many converters in the country reported to have stocked up sufficient material till April while others are planning to make additional purchases from local market. A buyer received Vietnamese homo-PP yarn at $1190/ton CIF Indonesia, LC AS term said, “Domestic market is about $30/ton higher than this offers and we might procure some quantity this week.”

In the PE sector, import HDPE film to the regional reaches multi-months high this week after an extended period of time being traded well below other PE film grades. The average import HDPE film to Southeast Asia at the moment stand at $1230/to CIF, LC AS term, which was last seen during June 2016. A series of production issues and planned shutdowns are blamed for such rapid price increment (Kindly refer to the Market Alert section on www.commoplast.com for details on these plant status).

A regional HDPE bags converter received fresh offers for Middle Eastern cargoes at $1210/ton, CIF, LC AS term, some $70/ton hike from last month said, “With the current ethylene costs, we think suppliers might hold very firm stance on their cargoes. Fortunately, we have sufficient material till April, therefore not rush to make purchases at the moment.”

Besides, LDPE film supply remains pretty tight across Southeast Asia and it appears that buyers are more interested in this grade than HDPE and LLDPE film. A Vietnamese trader informed, “We accepted to buy Saudi’s LDPE film at $1380/ton CIF, yet our supplier has no allocation for us. With the current supply condition, we expect the Malaysian supplier to lift their offers above the $1400/ton mark in the coming weeks.”  There are several PE cargoes from various origins being re-exported from China to Vietnam today.