Asia Daily PP and PE Overview 7 July 217

In China, futures market extended the firming trend, marking two striking sessions straight. PP contract for September delivery added CNY173/ton ($25/ton) to reach CNY8098/ton ($1018/ton without VAT). LLDPE contract settled at CNY140/ton ($21/ton higher) at CNY9010/ton ($1132/ton without VAT).

Strong futures market stimulated sentiment in spot ground; encouraging local sellers to implement CNY50-100/ton ($7-15/ton) hike on both PP and PE cargoes. There are some cargoes picked up by arbitrage traders, however, converters are calmer claiming slow demand season for end products. A producer informed, “We suspended offering today after achieving smooth sales throughout the week. We are looking at relatively firmer offers, especially for homo-PP in the coming week. Yet, any strong rebound might face resistance.”

A trader reported to have sold locally held Iranian LLDPE film at CNY8850/ton ($1112/ton without VAT), which is about CNY150/ton ($22/ton) below futures contract. “We hope that market would be better in the near term due to loosening credit control from banks. Agricultural film sector would enter high season by September, and we cautiously monitoring any movement in demand,” the trader commented.

In the import market, there are several deals for Iranian HDPE film (7000F) reported at $1075/ton CFR China, TT in advance term. Supply for this origin remains comfortable though market reported lower inventories levels at the main ports in recent week. A trader said, “We have about 5000 tons of Iranian PE, mostly HDPE cargoes parked at Malaysia port. We are able to offer these cargoes for LC 90 days term, and managed to catch some interest. We hope market would improve before entering the National Day in October.”

In Southeast Asia, trading activities are still limited as regional buyers take a pause to monitor further development before taking position. It is still unclear if post-holiday replenishment activities in Malaysia and Indonesia would happen as per market expectation. One thing to be sure is that local suppliers in Indonesia are putting a lot of effort to protect market share.

According to CommoPlast Price Index, domestic PP and PE market in Indonesia has been constantly following the downtrend for nearly 14 weeks now, keeping a very narrow gap with import materials. A local trader added, “We are offering homo-PP yarn based on FD Indonesia term at $1115/ton, cash payment, yet buyers are placing bids around $1080-1090/ton only. Local materials are very competitive and we might wait until next week for market to become more active before making any decision.” Indonesian buyers are not sharing the same view with Vietnamese customers regarding the near term market outlook for import homo-PP. Many Indonesian players are still expecting further reduction to take place despite tightening Middle Eastern supply.

Meanwhile, Southeast Asian suppliers continue to hold firm stance on import homo-PP offers to Vietnam. Despite disappointed initial respond, sellers mostly prefer to wait until next week for clearer direction. A major Thailand producer opened new offer at $1075/ton CIF Vietnam, LC AS term informed, “Buyers are still reluctant to place bid as many are waiting to see post-holiday demand condition in Muslim countries. We are in no rush to make any adjustment and would continue to monitor further development.”

The regional PE market remains largely stable though sentiment is heavy due to the presence of competitive Indian materials. With couple of technical issues taking place at major regional and international plants, it is believed that HDPE film market might endure a stronger outlook than LLDPE film. Besides the unexpected shutdown at Thailand’s SCG plant, which affected export allocation for August; Saudi’s PetroRabigh also encountered technical glitches at its 300,000 tons/year HDPE unit. Sources close to the producer commented that the unit might only be able to restart by end of July, from which export quantity would be negatively impacted.

A Thailand producer informed, “Several of our regular customers therefore have accepted our cargoes at $1100/ton CIF Vietnam, LC AS term. We are now trying to locate quantity for these orders.”