Asia Daily PP and PE Overview 12 April 2017

In China, September delivery contract for both PP and PE on Dalian Commodity Exchange extended the weakening trend for the third session in a row. PP futures slipped CNY108/ton ($16/ton) while LLDPE edged CNY85/ton ($12/ton) lower. Both contract settled at CNY7925/ton ($982/ton without VAT) and CNY9075/ton ($1124/ton without VAT) respectively.

Domestic spot market is loosing steam as buyers have made sufficient replenishment over the past three weeks though PP and PE prices remain unchanged from yesterday. “There are only traders seeking for competitive LDPE film cargoes to build up stock as at least five local LDPE plants undergo shutdown from April to May, which might tighten availability. Other than that, market is very much slower now,” a trader based in Ningxia said.

Import offers for homo-PP to China is still limited and show little changes from last week despite report on softer buying interest in Western market. On the other hand, Chinese suppliers found it more attractive to export cargoes to Southeast Asia at the moment given little arbitrage opportunity on Dalian Commodity Exchange. A producer offered coal based homo-PP yarn at $1080/ton FOB China said, “Buying interest in Southeast Asia is definitely stronger than China recently; however it is all about price matter now. We are still discussing with prospect buyers regarding discounts before concluding deals. The negotiation is tense.”  

The ending of agricultural film season has also sent demand for LDPE film from the import market downhill with Iranian supplier down adjusted offer slightly to $1230/ton CFR China to encourage purchases. The source said, “We can sell HDPE yarn better this week. We are feeling lack of confident in the near term market outlook since Chinese buyers have shortened replenishment time frame considerably.”     

In Southeast Asia, market remains on the same pace as reported in the previous trading day, however, it becomes visible that Chinese homo-PP is flowing into the region as prices here firm up. Vietnamese buyers reported receiving a good number of offers for Chinese regular and coal based PP from various sources in the range $1095-1135/ton CIF Vietnam term. Couple of deals for Chinese regular homo-PP are reported at the level $1090/ton with the same term today.

A trader in the country informed, “Local market is also active and prices are firming up gradually. We would replenish import cargoes if prices were below the $1100/ton threshold. Anything above this mark would become too risky to accept.”

Regional players are also fear that the recent firming trend in Vietnam might prove to be short lived as Chinese suppliers become more aggressive in directing cargoes to this market, easing supply concerns. Meanwhile, domestic suppliers in Indonesia continue to hold homo-PP prices on the similar par with import offers for ASEAN origins, giving buyers great alternative to firming international ground. A local supplier commented, “We might hold on to this strategy in the coming weeks. Market outlook is rather cloudy for May and June due to the Ramadan months and we hope buyers would become more willing to replenish larger quantity.”

Players in the PE market is awaiting fresh offers from Middle Eastern suppliers, and though with firming ethylene costs, many have expected PE market to remain largely stable month on month basis. “We were offering HDPE yarn at $1190/ton CIF Vietnam, however bids received only ranging $1150-1160/ton. Other irregular origins are available at rather competitive prices and therefore might limit market from any significant advancement.”

In fact, newly started up Indian maker is offering HDPE and LLDPE film to Vietnam at the range $1120-1130/ton CIF term and though these cargoes are unfamiliar in the market, its competitive prices have attracted buying attention.

In related plant status news, Singapore’s PCS is planning a shutdown at its No. 1 cracker in Jurong Island to deal with some technical issues. The cracker is able to produce 450,000 tons/year of ethylene. The restart date could not be ascertained. While industry participants are anticipating ethylene prices in Asia to stabilise given weak derivative markets, the shutdown at Malaysia’s Lotte Chemical Titan and Singapore’s PCC could provide some support for further price increment.