Asia Daily PP and PE Overview 23 June 2017

In China, futures market is mixed on the final trading day of the week with PP contract for September delivery gained CNY32/ton ($5/ton) to reach CNY7625/ton ($953/ton without VAT). Meanwhile, LLDPE contract continue to slide, shredding another CNY40/ton ($6/ton) to CNY8730/ton ($1091/ton without VAT).

Domestic traders continue to offer another CNY50-100/ton ($7-15/ton) discount from the previous trading day as demand remain sluggish despite firmer futures trading. Some agricultural film manufacturers are returning to make replenishment of LLDPE film, however, these buyers are very selective in term of cargoes with a trader informed, “Most only purchase small quantity at the lower end of the overall price range, hence we are not expecting any real uptick in demand until August-September period.”

In the import market, Indian maker open tender for 7000 tons of PE cargoes, mostly HDPE material, and initial respond from the market is not as great. “Only few of our customers placed bids at $960/ton for HDPE injection, other grades are not of interest,” a trader reported.

It also appears that import PP block copolymers to China is facing difficulties in attracting buyers as Saudi Arabia origin offer for this material is even lower than homo-PP grade. Mainstream Saudi homo-PP offered to China currently stand at $1000-1020/ton while block copolymer has reached $980/ton level, all based on CFR China, LC AS term.    

In Southeast Asia, there are very limited movements as most players in Malaysia and Indonesia have left for the Ramadan holidays. Buyers in other market within the region similarly, have withdrawn to the sideline to monitor further movement despite price adjustment from couple of international producer.

In fact, a major Saudi Arabia producer stepped back on both PP and PE prices to Vietnam today from initial offering after encountered stiff resistance. In the latest adjustment, the maker cut PE prices by $20/ton from initial offer to $1080/ton for both HDPE and LLDPE film, and at $1040/ton for HDPE blow molding, CIF Vietnam, LC AS term. On the other hand, PP prices only witness $5-10/ton drop to $1045/ton for homo-PP and $1070/ton for PP block copolymer, with the same term. Buyers have yet to show acceptance for the adjusted prices. A market source commented, “We are asking for additional $10/ton discount on both PP and PE to make replenishment and might have to wait until next Thursday for the supplier to give feed back. We are willing to wait.”

In related production news, Thailand’s SCG Chemicals is forced to lower the operating rate at its HDPE unit since last week due to some technical issues taking place at the ethylene pipeline, causing feedstock disruption. A source close to the company informed that it is working on the issues and might be able to resume production by first week of July. The sources added, “We have reduced HDPE allocation for export market at the moment and this condition might persist throughout July. We initially planned to source ethylene from spot market, however due to the pipeline issues, we can’t feed into the plant.”

In the regional PP market, sellers are hoping that firmer propylene costs could keep prices from any additional decline though demand is not showing much support. “We hope that Indonesian buyers would return with stronger appetite in July as inventories at buyers side does not appear to be too high. At the moment, we think PP market is more stable than PE thanks to stronger upstream costs,” a trader said.

Meanwhile, falling local prices has discouraged buying interest in Vietnam and import homo-PP at the range $1045-1050/ton CIF for dutiable cargoes could only attract few deals. A buyer said, “Local ground is very quiet and most traders are selling at loses. Even with firming propylene costs, we are just not confident in making replenishment.”