Asia Daily PP and PE Overview 13 June 2017

In China, futures market nosedived on the second trading day of the week, erasing most of the gain record in the previous session. September delivery contract for PP plunged CNY201/ton ($30/ton) to close at CNY7688/ton ($966/ton without VAT). LLDPE contract slashed CNY165/ton ($24/ton) to reach CNY8930/ton ($1122/ton without VAT).

Trading activities in local spot market is slightly lower than the previous session though sellers still lifted prices by CNY50-100/ton ($7-15/ton). A trader informed, “Converters are still sourcing based on need basis, yet the sentiment is affected by the fluctuation in futures trade. We think in the near term, PE might be firmer due to the agricultural film season and the preparation for the Single Day sales in November.

In the import market, both Thailand and Taiwanese producers cut PE prices to China due to soft buying interest for imported materials. Thai’s PE offered at $1110/ton for HDPE film and $1150/ton for LDPE film, CFR China with a distributor said, “Though firmer futures market support the local sentiment these two days; we are not seeing much interest in the import market. Our customers are still asking for additional discount despite the latest downward adjustment. We have yet to decide on the deal levels and would like to monitor furhter development for now."

Other international suppliers claimed to have received good number of purchase inquiries from Chinese buyers, however, most bids received at well below sell idea levels, make it difficult to agree on deals.

In Southeast Asia, PE suppliers are very active in giving offers to the region mostly at stable to softer levels compared to yesterday. In fact, a major Saudi Arabia producer opened LLDPE film prices to Vietnam at $20/ton reduction from last week, at $1100/ton CIF, LC AS term. Several deals are reported at the latest levels without any additional discount. A distributor informed, “We have total of 400 tons and sold out most of the quantity by now. Customers are slowly catching the bottom prices and we think market might be heading for stabilization.”

However, sentiment in the import PE market in Vietnam turn heavy toward the end of the day as traders once again race to cut prices to attract buying interest. Korean LLDPE film is concluded below the $1100/ton threshold at $1090/ton CIF Vietnam, LC AS term. Meanwhile, traders are collecting bids for Kuwait LLDPE film at $1080/ton, about $20/ton below the official price list. “And therefore, we just feel too risky to enter any deal at the moment. Domestic market is also sliding as players follow closely the development in the import ground. Further reduction on deep-seas cargoes might become possible in the coming weeks.”

Suppliers on the other hand, are expressing diverged opinion on July outlook with major Thai producer intend to implement $20/ton increased for both PP and PE on reduced allocation due to low run rate. In contrast, a Saudi Arabia maker said, “Our plant is operating at high rate throughout past couple of months, hence we might step up effort to deplete cargoes before the Eid al-Fitr.”

It is reported that demand in local Indonesia market pick up visibly this week with most traders contacted by CommoPlast claimed healthy sales, especially for homo-PP. Earlier this week, a major domestic producer lifted local PP prices by $10/ton, which set the market tone and as buyers return to make final replenishment before the road ban take place, traders implemented larger hike of $20/ton on PP cargoes. A trader said, “We are happy with the number of deals concluded today. The recent incident at Chandra Asri’s plant caused great concern over the supply condition in the coming month. Buyers therefore, prefer to procure additional stock.”

Chinese coal based homo-PP in contrast, appears to be softer in Vietnam while there are also re-export Russian homo-PP cargoes from China at $1070/ton CIF Vietnam, LC AS term, which sees little buying interest.