Asia Daily PP and PE Overview 10 April 2017

In China, the Dalian Commodity Exchange started a new contract for September delivery at soft notes. PP futures fell CNY295/ton ($43/ton) to close at CNY8032/ton ($993/ton without VAT). LLDPE futures fell CNY290/ton ($42/ton) to reach CNY9270/ton ($1147/ton without VAT).

There are very limited transaction reported on the first trading day of the week in local market, and except LDPE film prices gained additional CNY100/ton ($14/ton) from last Friday, other PP and PE prices softened by CNY50-100/ton ($7-14/ton). It appears that buying interest is dropping among domestic buyers and couple of traders has portrayed less of optimistic expectation for LLDPE film in line with the end of agricultural film season. “On the other hand, local supplies have been digested considerably, relieving sellers from pressure. At the moment, prices might not drop significantly, yet we would continue to monitor further development.”

In the import ground, offers for homo-PP from international suppliers hold largely stable at $1030-1050/ton CFR China, LC 0-90 days term. While purchasing activities reported at these price levels are rather sluggish; sellers are not showing the urge to cut prices. Player believed that more activities would be observed later this week.

A major Taiwanese maker lifted HDPE offers by $10/ton from last week reaching $1180/ton for film and $1190/ton for yarn grade, CFR China term. A trader reported, “We managed to conclude several deals after $5/ton discount. With the current upstream costs and energy values, we think that market would sustain the stable trend throughout April.”

In Southeast Asia, there are very limited trading activities reported on the first trading day of the week, especially in the PE sector. There are only few international suppliers have opened fresh offers to the region while others are monitoring market respond to higher energy values before deciding on the new offers.

A major Thailand producer commented, “We are considering our new offers for this weeks to Southeast Asian market. Domestic Thailand ground is very weak as most buyers are taking off for the Songkran Festival, hence we might have extra quantity to export this week. Looking at the upstream value, we are not planning any reduction on the new offers.”

It is also reported that couple of Korean suppliers have withdrawn their LLDPE film offers to Vietnam after achieving satisfactory deals in the previous week at the range $1160-1170/ton CIF term. “The suppliers might adjust offers in the coming days given stronger ethylene costs and limited offers from other international sellers,” a buyer commented.

Meanwhile, local Vietnam and Indonesia market are moving in opposite direction as major local producers in Indonesia cut LLDPE film prices by IDR270,000/ton ($20/ton) today after eight (8) weeks of maintaining prices, while PP prices fell another $10/ton from last week. One justification for such reduction is due to stronger Indonesian rupiah against the USD. In contrast, local PP and PE prices in Vietnam firmed up in the range VND200,000-500,000/ton ($9-22/ton) though the number of deals concluded are still limited.

In the PP sector, import offers to the region has firmed up and suppliers are not willing to concede to large discount. However, buyers appear to be reluctant to accept the hike and many have shown the interest to make fresh replenishment at the previous prices. A South Korean producer implemented $40/ton hike on homo-PP cargoes to Vietnam from late March, reaching $1150/ton CIF Vietnam, LC AS term. “Buyers have yet to accept the price increment, however, we plan to hold firm on our cargoes as market is set to continue moving higher in the near term,” a source close to the maker commented.

Meanwhile, Vietnamese homo-PP offers to Indonesia hold firm at $1160/ton CIF Indonesia term with a buyer reported, “Our supplier only agree to $5/ton discount and we proceeded with a small purchase as import offers might continue to firm up in the near term. At the meantime, we source larger quantity in local market given more competitive price levels.”