Asia Daily PP and PE Overview 01 Mar 2017

In China, futures market concluded the third trading day of the week on soft note with May delivery contract for PP inched CNY37/ton ($5/ton) lower to reach CNY8564/ton ($1064/ton without VAT). LLDPE contract also slipped CNY45/ton ($7/ton) to settle at CNY9585/ton ($1191/ton without VAT).

There is little movement in domestic spot market in term of buying interest, however, in term of prices, suppliers are putting effort to stabilize the trend, with no adjustment from major domestic producer today. The on going environmental compliance inspection in the northern China area is forcing a number of small size converters to shutdown due to obsolete waste disposal system. “Therefore, many of our parcels bounced back as buyers are not around to receive the material. For medium to large size converters, their plants are not affected,” a trader informed.

Another trader added, “Today we only managed to sell 70 tons of material. Buyers are very cautious, showing no interest in our offers, and therefore we think market might extend the softening trend in the near term.”   

There are little movement in the import market and international suppliers are showing concern over the price movement in local ground with a Thai producer commented, “We delayed price announcement as it seem domestic market has yet to settle. Local suppliers have been cutting offers for nearly two weeks straight, from which import material might find it difficult to compete. We continue to monitor further development, yet hope to see better sentiment by second half of the month.”

In Southeast Asia, the general sentiment is getting calmer as buyers are adopting more of conservative stance when it comes to making fresh purchases. There is a wide spread expectation that both PP and PE prices might face correction as a result of improved supply, weak cargoes off-take in China and softening upstream costs.

It is clear that import homo-PP prices to the region has softened slight from last week, though couple of suppliers are still attempting to hold firm on their cargoes. A Saudi Arabia producer opened March delivery offers to Vietnam at $90/ton increased from last month to reach $1170/ton CIF, LC AS term. A distributor informed, “The new offers come at the time sentiment is weakening and might face difficulty in attracting buying attention. We plan to open new prices at $10/ton below the official price list.” A buyer received the offer added, “These offers are no longer competitive with the presence of prompt re-export material. We expect the maker to concede to larger than usual discount in order to close deals.” In fact, distributors are collecting bids for the cargoes at the level $1130/ton with the same term, however, it is still pending for approval from the producer side.

In Indonesia, offers for Thailand’s homo-PP have also dropped to below the $1200/ton threshold, touching $1190/ton CIF Indonesia, LC AS term. “We are placing bid for another $20/ton discount and currently waiting for the supplier’s feedback. Demand in major regional market including China and Vietnam is weakening, from which we are seeing increasing number of offers available in Indonesia this week, including re-export material.”

The PE market in Southeast Asia is on the other hand, still struggling to draw a clear line on the possible direction with suppliers adopting diverged movement. While several have stepped back on their hike target, others show no intention to reduce offers. It is confirmed that major Thailand producer concluded HDPE film in Vietnam at $1190/ton CIF, LC AS term, some $40/ton lower than last week. Source close to the producer informed, “We have sold a good quantity of material at this level and at the moment might monitor further respond from buyer. Import prices above the $1200/ton market at the moment are facing stiff resistance.”