Asia Daily PP and PE Overview 07 April 2017

In China, the futures market sees only small fluctuation on the last trading day of the week. May delivery contract for PP weakened CNY12/ton ($2/ton) from the previous trading day to reach CNY8261/ton ($1023/ton without VAT). LLDE contract added CNY15/ton ($2/ton) to reach CNY9485/ton ($1175/ton without VAT).

Players reported seeing healthy demand in local spot market, from which offers for both PP and PE firmed up in the range of CNY50-100/ton ($7-14/ton). Market appears to be monitoring closely the outcome of the major meeting between leaders of China and USA, “And if the outcome is positive, we believed that buyers would be more confident to make larger replenishment,” a market source said.

At the moment, many converters are still sourcing to meet immediately need, and would purchasing activities continue to improve in the near term, it remains a question. The packaging sector normally enters slow season from April to June in Southern China with a trader in Xiamen added, “That is why in recent weeks, local traders are more active in taking cargoes to maintain stock on hand and also to leverage arbitrage opportunity in the futures market.”

In the import market, Iranian suppliers have lifted HDPE film offers to the country by $10-20/ton from last week with several deals for this cargo reported at $1160/ton CFR China term. Despite deep-seas HDPE film parcels originated from Brazil, Russia and Mexico are priced at only $1080-1110/ton CFR China; buyers are not showing much interest. “Converters are anticipating lesser Iranian cargoes arrival in the coming months, therefore trying to secure some quantity,” a trader sold 300 tons of Iranian HDPE film at the mentioned price said. Several deals for Saudi Arabia HDPE film also reported in the range $1155-1160/ton with the same term.

The import PP market remains largely unchanged day on day basis and buyers are still looking for cargoes, though prices must be at the lower end of the overall price range. “We tried to lift offers for Middle Eastern cargoes but face stiff resistance and we have to step back afterward,” a trader informed.

In Southeast Asia, sentiment improves visibly on the final trading day of the week as buyers responded to the possibility that the energy market might surge as a result of the recent military activities in Middle East. Vietnamese players resumed working after a brief holiday to be more active in both local and import ground on the belief that both PP and PE prices have reached the bottom.

A Vietnamese trader purchased Middle Eastern LLDPE film at $1180/ton CIF, LC AS term said, “We are also talking to Korean suppliers to procure some LLDPE film cargoes at slightly lower level to balance up the costs. Most other sellers are no longer open to negotiation claiming better sales in other market.” It is reported that domestic Vietnam market also gains momentum with more buyers become active in searching for cargoes at the lower end of the overall price range. “However, traders are holding back their cargoes and some have implemented moderate hike to reflex improved market sentiment,” a market source commented.

It appears that international PE suppliers are taking firmer stance on their cargoes, refusing to enter price negotiation or discount. Some claimed to have better sales for LLDPE film to China amid the agricultural film season. Besides, the tightening local supply in Indonesia and Malaysia also encourage better outlook for LLDPE film sector.

The regional homo-PP market witness a hike of $20/ton from an Indian producer as the maker informed in the earlier session. An international distributor opened fresh weekly prices for this cargo at $1120/ton CIF Vietnam, LC AS term today; however, buyers are still negotiating for previous levels. A distributor source said, “Received many inquiries today, accounted for nearly 2000 tons of material, though most are asking for last week’s prices. Marker has touched the bottom and might remain on the stable to firmer trend in the near term.”

Within Indonesia, traders are attempting to lift local offers for homo-PP prices in line with firmer import offers, however, major local producer remains aggressive in pushing cargoes out at $1170-1180/ton FD Indonesia, cash term, causing great concern among buyers. “The contradicting trend between local and import market is not good for traders. International suppliers might face real difficulties in selling to Indonesia this month,” a trader commented.