Asia Daily PP and PE Overview 30 June 2017

In China, futures market concluded the final trading day of the week on firm notes with September delivery contract for PP added CNY56/ton ($8/ton) at CNY7903/ton ($998/ton without VAT). LLDPE contract settled at CNY65/ton ($10/ton) higher, reaching CNY9025/ton ($1139/ton without VAT).

Domestic spot offers for PP, HDPE and LDPE firmed up by CNY50-100/ton ($7-15/ton) while LLDPE film dropped CNY50/ton ($7/ton). Supply for LDPE film and heavy-duty grades remain relatively tight compared to others, from which suppliers can fetch better prices. “However, we are monitoring the start up of Bakhtar Commercial Company’s 300,000 tons/year LDPE line in Iran, which prime cargoes might arrive in China by end of August or early September. Supply might ease,” a trader said. In the import market, several deals for LDPE heavy duty, originated from Thailand and Qatar are reported in the range $1170-1190/ton CFR China, LC AS term.

Couple of converters in the flexible packaging sector informed about healthy export orders for end products, “Domestic demand is much weaker. We added new machines this year to cater for export market. Yet, raw material prices are really soft and we prefer to just source hand to mouth basis.”

Import LLDPE film to China below the $1000/ton threshold also disappearing with deals for Iranian LLDPE film today observed at $1015/ton CFR China, TT in advance term, an increased of $35/ton week on week basis. A trader purchased 1000 tons of this material said, “We think tightening LDPE supply would support the LLDPE film market. Players did not make sufficient import purchases over the past month, which might lead to temporary short of availability in the near term, hence we proceed with the buy.” 

In Southeast Asia, most buyers have concluded PE businesses for July delivery after major international suppliers agreed to discount in the previous session. Major Saudi Arabia producer claimed to have sold out all available HDPE and LLDPE film cargoes to the country at $1070/ton while many buyers are still asking for material. There is a strong belief among Vietnamese buyers that market has reached the bottom, which encourage replenishment.

An international trader informed, “We are asking for additional quantity from our principal supplier too and currently wait for feedback. Buyers have returned after several silent days earlier this week. We think prices might have the opportunity to inched higher in the near term.”

However, anything above the $1070/ton mark is still not accepted, which raises question on how far could PE market rebound. A trader received final LLDPE film prices from another Saudi Arabia producer at $1100/ton CIF Vietnam added, “We are considering the purchase as this is above market level at the moment. It is riskier than other cargoes. We do not expect PE market to witness any breakthrough in term of prices in the near term as it is still off-peak season.”

In the PP market, the price gap between dutiable on non-dutiable cargoes is still absence and there are very limited transaction seen. International traders reported good number of price inquiries, yet unable to conclude satisfactory number of deals. Am international trader said, “Vietnamese buyers are placing bids for Philippines homo-PP at $1055/ton CIF, LC 90 days term and we are waiting for principal suppliers feedback. We only have 300 tons of this material on hand, and therefore we think market could gain some stabilization in the near term.”

It does appears that market might not be able to firm up for the first half of July as most buyers in Malaysia and Indonesia have yet to completely return to work. “We plan to only source a small quantity in domestic market. Our end product business drop about 20% in the first six months of the year and we have low confident for the second half,” a Malaysian buyer reported.