Asia Daily PP and PE Overview 24 April 2017

In China, futures market open the first trading session of the week on soft note as September delivery contract for PP plunged CNY165/ton ($24/ton) to reach CNY7565/ton ($952/ton without VAT). LLDPE contract fell CNY180/ton ($27/ton) to close at CNY8640/ton ($1088/ton without VAT).

Buying interest in the domestic spot market remain relatively soft and traders are not expecting any pre-holiday replenishment this time. Compared to last week, offers for both PP and PE drop another CNY50-100/ton ($7-14/ton). A trader said, “Several of our customers in the packaging sector has to shutdown their plants in compliance with government’s requirement during environmental inspection. Demand therefore has been shaken. Domestic market might not see sufficient support to recover in the remaining of April amid a series of policies changes.” Outlook becomes even cloudier as propylene supply bloated in local China market, pulling prices down by approximate $190/ton from the multi-year high levels recorded during mid-February, reaching $830/ton CFR China term.

In import market, traders are forward selling Indian homo-PP cargoes at $990/ton CFR China, LC 30 days term for shipment before 30 June. “The tight availability of import cargoes does not provide much support to the market as local material continue to hold more competitive position on comfortable supply,” a trader commented. Inventory at the main ports are reducing due to diminishing number of import cargoes arrival, player said. However, would this stimulate buying interest for import material amid current domestic supply-demand balance, it remains a question.

In Southeast Asia, there are very limited trading activities as both Malaysia and Indonesia markets are on holiday; however, couple of international suppliers have announced fresh offers to Vietnam. In fact, major Saudi Arabia producer slashes PE offers by $20/ton month on month basis to the country, reaching $1180/ton for HDPE film and $1200-1210/ton for LLDPE film, all based on CIF Vietnam, LC AS term.

A buyer commented, “The supplier is very firm on their cargoes claiming limited allocation, yet we think additional discount must become available in order to conclude deals as more competitive cargoes are available in the distribution market at the moment.” In fact, couple of traders are still keeping Middle Eastern LLDPE film at $1170/ton while HDPE film has reached $1140/ton with the same term, players reported.

Meanwhile, demand for HDPE film in local Vietnam market is still healthy though traders are expressing difficulties they face in implementing further hike on the cargoes. A trader sold Saudi’s HDPE film at VND30,000,000/ton ($1200/ton without VAT) FD Vietnam, cash term said, “We attempted to lift our offer by another VND200,000/ton ($9/ton), yet unable to conclude any deal. We think that the firming trend is loosing steam and prices might only follow the stable track in the near term.” Depite such condition, traders have not expressed any intention to offer discounts amid strong upstream costs and lack of sales pressure. Domestic HDPE film currently stand at VND29,700,000-30,300,000/ton ($1188-1213/ton without VAT), FD Vietnam, cash term.

Meanwhile, import coal based homo-PP offers from China to Vietnam continue to witness additional discounts from last week, reaching $1050-1060/ton CIF, LC AS term. Couple of deals are reported at this level as buyers perceived this level to be competitive. A source close to the producer informed, “We managed to sell about 1000 tons to export market today with few hundred tons to Vietnam. We are looking for opportunity to expand the export ground since local demand is still slack.”