Asia Daily PP and PE Overview 06 April 2017

In China, futures prices on Dalian Commodity Exchange continue to firm up with May delivery contract for PP settled at CNY131/ton ($19/ton) higher while LLDPE contract surged CNY190/ton ($28/ton). Both contracts settled at CNY8323/ton ($1031/ton without VAT) and CNY9530/ton ($1180/ton without VAT) respectively.

Trading activities in local spot market is reported to be healthy in the post holiday period, yet local PP and PE offers are firming up in a very slow pace. Today, traders are attempting to lift offers by only CNY50/ton ($7/ton) for PP cargoes and CNY100/ton ($14/ton) for LLDPE and LDPE film cargoes. “Sales are satisfactory, especially for LLDPE film due to strong buying interest from the agriculture film sector and better futures market arbitrage opportunity. We hope this condition to persist in the coming weeks, which would speed up the rate of inventory digestion,” a local trader informed.

In the import market, Saudi’s homo-PP has reach the $1000-1010/ton mark and attracted great buying interest from converters. A Shanghai based trader said, “Many large scale manufacturers have been waiting for prices to reach this level to make replenishment. Meanwhile, our Oman cargoes offered at $1030/ton CFR China are not in buyer’s favour.” Several deals for Indian homo-PP are also reported in the range $1025-1030/ton CFR China term today.

Players in the PE market think that prices are stabilising and that room for further reduction is rather limited. “Therefore, we implemented $10/ton increased on our Kuwait HDPE film cargoes to $1160-1170/ton and managed to conclude deals for few hundred tons based on bonded warehouse term. The promptness of the cargoes is also an added advantage,” a trader in Beijing reported.

In Southeast Asia, purchasing activities in local Indonesia improve visibly after major local producer slashed homo-PP yarn offers by $60-70/ton from initial price list. Local traders are planning to withhold the on hand cargoes after managed to conclude a good number of deal at $1170-1180/ton without VAT, FD Indonesia term. “Besides, more international suppliers have also raised intention to lift homo-PP offers to Southeast Asia. Therefore, we think that local market should be firmer in the coming week,” a trader commented.

In fact, a major Indian producer informed that the company has implemented $20/ton hike to all distribution channels in Southeast Asia market from last week and expect new offers to buyers to reach about $1120/ton CIF SEA, LC AS term. The maker said, “We received a good number of purchase inquiries from market and we think it is time for market to revive. Stronger energy market and healthy post-holiday buying interest in China also provides support for the general sentiment.”

As reported earlier, a South Korean producer sold homo-PP yarn to Vietnam last week at $1110/ton CIF Vietnam, LC AS term has also brought up plan to increase their offers, yet new prices might only be announced in one or two weeks time. Meanwhile, a Saudi Arabia producer has already implemented $10/ton hike on latest offers for homo-PP yarn to Vietnam at $1100/ton CIF term and managed to sell out available quantity shortly after that. And even a major Southeast Asian producer also expressed intention to lift homo-PP offers by approximate $30/ton from last month.

However, the main concern at the moment is that the price gap between China and Southeast Asia has widened to more than $100/ton triggering a possibility that re-export cargoes from China might once again flow into the region.

In the regional PE market, international suppliers are not open to negotiation though buyers across the region see little opportunity for price increment. An Indonesian buyer purchased Qatar’s LLDPE film at $1195/ton CIF, LC AS term said, “Other Saudi supplier still maintains firm stance on their cargoes at $1210/ton with the same term. Local supply is tightening, hence we decided to source a small quantity.”

A regional producer has also expressed their intention to implement a small hike on LDPE film cargoes pointing to better buying interest in China and market is about to enter the high demand season.