Asia Daily PP and PE Overview 29 May 2017

There are no trading activities in China as players are off for the Dragon Boat Festival. Market shall resume by Wednesday, 31 May 2017.

In Southeast Asia, Indonesia remains the most active market within the region as the number of deal concluded in this market on the first trading day of the week appear to be much better than others. In fact, Saudi Arabia producer reported to have sold homo-PP at $1065/ton CIF Indonesia, LC AS term, no discount from initial offers announced late last week. A trader offered on behalf of the producer commented, “Market might continue to firm up in the near term. Most producers are not having high inventories for PP now, while our customers are still asking for additional quantity.” Another trader also reported to have sold out the final allocation for Philippines homo-PP to Indonesia at $1080/ton with the same term.

In contrast, domestic producer in Indonesia continue to implement $10/ton reduction on the latest weekly prices with aim to deplete more inventories. Market sources reported that Chandra Asri is currently operating the PP unit at approximate 60-70% capacity due to some issues at cooling tower and might only be able to ramp up the rate toward mid of June.

In Vietnam, a major Saudi Arabia producer down adjusted PE prices for the second time, bringing latest prices to $1110/ton for HDPE film and $1120/ton for LLDPE film, all based on CIF Vietnam, LC AS term. Vietnamese buyers are not very confident to proceed with purchases immediately as ethylene costs fell further. A buyer commented, “We would buy at these prices in the previous week. Market seems worsening this week and hence we might skip buying.” Other buyers planned to only replenish a small quantity.

Sentiment in Malaysia is not very strong as the fasting month started. Several converters in the flexible packaging sector are still receiving last minutes orders for end products, yet most buyers are expressing expectation for lower prices from local producer for June delivery. A market source said, “Domestic offers might need to go down by MYR100-200/ton ($23-47/ton) from last month due to softer demand and strengthening local currencies. We are now on the side-line waiting for new prices before making any decision.”