Asia Daily PP and PE Overview 26 April 2017

In China, PP futures surged drastically as the week proceeds, gaining CNY101/ton ($15/ton) day on day basis to reach CNY7668/ton ($951/ton without VAT). LLDPE contract for September delivery has yet to regain the momentum, adding only CNY10/ton ($1.5/ton) to reach CNY8635/ton ($1071/ton without VAT).

There is some movement in the domestic spot market, which players believed to be pre-holiday replenishment activities among converters. Prices at the upper end of the overall market range remain largely unchanged while traders are attempting to implement a small hike of CNY50/ton ($7/ton) at the lower end.

A trader in Beijing said, “We managed to sell PE better than PP today, however, most deals are in small quantity. We did not adjust our offers from yesterday and most of these cargoes are to be delivered by mid of May.” Another BOPP converter added, “We do received additional orders for end product this week and hence, making purchases based on need basis. May is normally the slow season for our business and we might need to be more cautious when it comes to make fresh replenishment.”

There is little movement in the import market after some discount observed in the previous session. On the other hand, Chinese traders are very active in directing homo-PP cargoes to export market with a trader sold regular homo-PP yarn at $1060/ton CIF Vietnam said, “Demand for homo-PP yarn in Vietnam is rather satisfactory. We sold some quantity today without any discount. This condition might persist in the remaining of April.”

In Southeast Asia, more international suppliers announced May shipment offers for PP and PE to the region at softer note compared to last month. Regional players are aggressively placing bid at well below offered level pinpointed to the lack of confident in the near term market outlook. Vietnamese buyers are requesting for $30-40/ton discount on deals for Saudi Arabia HDPE, LLDPE film and homo-PP cargoes.

An international trader selling Saudi origins material agreed to the bids to conclude deals at $1150/ton for LLDPE film, $1140/ton for HDPE film and $1050/ton for homo-PP, CIF Vietnam, LC AS term. A converter received the final prices commented, “We plan purchase about 200 tons of PE cargoes only. Our end product demand is not very strong and our plant is only operating at 70% capacity at the moment. At the mean time, we are still having some inventories on hand.” 

Several other local traders have also expressed their willingness to purchase some PE quantity at the discounted prices while buyers are still reluctant toward PP cargoes. In contrast, import LDPE film to the country appear to be firmer in line with the tightened regional supply due to production disruption at Malaysia’s Lotte Chemical Titan and Singapore’s TPC.

As mentioned, regional buyers hold strong to the belief that import PP market still has room for further reduction. A Thailand maker slashed PP offers by $20-30/ton from earlier this week for both homo-PP yarn and PP block copolymers to reach $1105/ton, CIF Vietnam, LC AS term. Buyers in the country are placing bid for homo-PP yarn cargoes in the range $1060-1090/ton with the same term with a source close to the producer informed, “We are considering bids at the upper end of the range we received. Buying interest for import cargoes is not very strong in Vietnam at the moment despite tight availability for yarn grade in the local ground.”

Would the producer accept the bid at $1090/ton CIF Vietnam, LC AS term for homo-PP yarn cargoes, pressure on dutiable cargoes is expected to heighten, players said. “We have suspended our purchases as market seems still on the downward slope,” a buyer said.