Asia Daily PP and PE Overview 03 April 2017

There are no trading activities in China today as players are off for the Tomb Sweeping Festival.

In Southeast Asia, the general sentiment remains mostly unchanged from last week with the PP market is moving in diverged trend across the country. While Vietnamese buyers are showing an increasing acceptance level toward regular dutiable cargoes at the range $1090-1100/ton CIF term; Indonesian buyers have withdrawn to the side-line to wait for further discounts to emerge.

A major Thailand producer down-adjusted homo-PP offers to Indonesia for the second week in a row, touching $1230/ton CIF Indonesia, LC AS term. Buyers in the country are still reluctant to accept the latest offers, pointing to the available of more competitive cargoes from other Southeast Asian suppliers. A buyer commented, “Non-dutiable homo-PP cargoes from Australia has dropped to $1130/ton CIF Indonesia term, and we expect Southeast Asian origin to match this level in the near term. We prefer only to source material hand to mouth basis to avoid any price risk.”

In Vietnam, the import homo-PP market appears to be regaining some stabilization as converters come back to make replenishment. However, traders remain cautious claiming that lengthy supply in the upstream propylene market might again impact buyer confidence. “There are some initial signs that the PP market is getting firmer and room for further reduction is narrower. Yet, we need to monitor further movement before we could determine the sustainability of the current trend,” a buyer received $45/ton hike on Chinese coal based homo-PP yarn from last week at $1115/ton CIF Vietnam said.

The regional PE market is relatively calmer and many Middle Eastern suppliers are not open to negotiation on their available cargoes. However, import LLDPE film offers near to the $1200/ton marks are not very attractive to regional buyers. This tug of war might persist in the near term with a market source explained, “Middle Eastern suppliers might favor local markets in April more amid the preparation for Ramadan season, from which prices to Asia might hold just steady. We have been talking to our Saudi suppliers for some discounts on LLDPE film cargoes since last week, yet got rejected.” Meanwhile, local LLDPE film supply in Malaysia and Indonesia appears to be tight given production issues.

Buyers in Malaysia have responded positively to the latest price announcement from a major domestic producer and several HDPE bags converters reported visible improvement in end product businesses. “Most converters did not keep high inventory since beginning of the year due to high prices, and with the recent reduction, buyers have returned to make replenishment,” a market source added. Players however fear that this momentum might fade once the fasting month start in late May.