Asia Daily PP and PE Overview 05 May 2017

In China, the Dalian Commodity Exchange settled on a mixed trend on the final trading day after a volatile week. PP contract for September delivery reduced additional CNY77/ton ($11/ton) from the previous trading session at CNY7521/ton ($932/ton without VAT) while LLDPE contract settled at CNY8705/ton ($1078/ton without VAT), only CNY5/ton ($0.7/ton) higher than yesterday.

Purchasing activities in domestic spot market remain steady as converters are making basic replenishment due to low inventories. Many traders are attempting to maintain offers unchanged day on day, while several others are offering CNY50-100/ton ($7-14/ton) discount on both PP and PE to entice demand. There are some signals that domestic prices might continue to inch lower in the near term with a trader informed, “Local producer allocated additional 1000 tons of homo-PP yarn to us today at CNY300/ton ($44/ton) below current market levels. The producer might be reducing inventories ahead of the ChinaPlast event. This has us expecting bearish condition in the coming week.”

In the import market, a good number of deals are reported for homo-PP cargoes at prices below the $1000/ton threshold. In fact, several traders are offering remaining USA cargoes at $960-970/ton CFR China, LC AS term. A converter purchased the cargoes said, “We have also purchased some UAE homo-PP cargoes at $940/ton CFR China term from local trader. Compared to Saudi’s origin, these cargoes are every competitive. We cannot accept prices above the $1000/ton tons at the current market condition.”

In the import market, except the availability of low price HDPE cargoes reported in the previous reports, other international suppliers mostly are on wait and see before announcing new offers in the coming weeks. On the other notes, import LDPE film from Middle Eastern has gone down to $1200/ton mark this week on weak buying interest.

In Southeast Asia, the general market sentiment is stalled on the final trading day of the week as buyers adopted extra cautious stance after intra-day trading crude futures fell below the $45 per barrel for the first time since November 2016. Many buyers, who were actively placing bids for import cargoes in the previous trading session, has now withdrawn their bids.

An international sellers offered Saudi’s PE at $1140/ton CIF Vietnam for both HDPE and LLDPE film said, “Some customers were contacting us yesterday for cargoes but changed their intention today. Market is getting slower in spite of stronger ethylene costs, hence we might hold back our cargoes until next week.”

Indonesian buyers have also withdrawn to the sideline to monitor further development. “We have suspended all purchasing activities today to wait for clearer market direction. Both PP and PE prices might witness additional discount in the near term, just that the reduction range might not be too large,” a buyer said.

There are some market talks regarding minor technical glitches at Indonesia’s Chandra Asri PP plant which caused lower operating rate, leading to delay in delivery for homo-PP yarn and coating cargoes. However, the producer has not made any comment on this info at the time this report is published.

The regional PP market remains quiet with limited number of new offers observed. A trader hold Chinese coal based homo-PP yarn at $1060/ton CIF Vietnam, LC AS term said, “Other grades, including Saudi cargoes, we have sold out. Market sentiment is softening and even local prices have dropped slightly this week. We are really concern about the market outlook in the coming week.” Meanwhile, several other buyers in the country are placing bid for regular Saudi’s PP yarn cargoes at $1050/ton CIF Vietnam, LC AS term.