Asia Daily PP and PE Overview 14 July 2017

In China, futures prices on Dalian Commodity Exchange come to a more balance closing on the final trading day of the week. PP contract for September delivery increased CNY44/ton ($6/ton) from previous session to reach CNY8064/ton ($1017/ton without VAT). LLDPE contract slows down a little, adding only CNY10/ton ($1.5/ton) to reach CNY9160/ton ($1155/ton without VAT).

There are little changes in domestic spot trading as most suppliers maintain offers for both PP and PE unchanged from the previous trading day. Players informed that warehouses are carrying reduced quantity of inventories, though homo-PP availability seems less than other grades. A trader added, “Sales for this month is rather smooth and local sellers are not facing inventory pressure. Downstream markets are still in traditional slow season, however we expect buying interest to hold steady amid tightening supply.”

There is heavy speculation that domestic spot market would remain firm for the remaining of July as loosened borrowing regulations from banks allow more capital available to investors. “More activities in futures trading would also stimulated spot sentiment,” a market source commented.

In the import ground, several deals for import HPDE film from Thailand and Taiwan are concluded at $1120/ton CFR China, LC 90 days terms, and there are signs that availability for this grade is very limited at the moment. “Yet, buyers are not accepting anything above the $1120/ton levels as we faced strong resistance implementing additional $10/ton hike. Market might need a little more time to move higher.”

Similar situation is reported on Indian HDPE yarn cargoes, which were initially offered at $1130/ton CFR China, LC AS term, LDS 10 September. “We have to step back on the offers by $20/ton in order to conclude deals. Prices are still lacking strong support for any significant rebound.”

In Southeast Asia, market is calmer on the final trading day of the week though couple of international suppliers opened new offers for both PP and PE. With supply for HDPE film in China seems to be tightening, Southeast Asian buyers adopted more conservative stance due to weak local ground.

At the moment, domestic HDPE film in Indonesia still holds more competitive position than most import cargoes. As reported in the previous session that a major local producer slashed HDPE and LLDPE film prices by $60-70/ton from official price list to speed up sales process; several traders have followed the move. A buyer reported, “We purchased a comfortable quantity and many other buyers are able to obtain same prices. Our supplier informed that their inventory is falling fast, which might allow market to revive in the near term.”

Meanwhile, Vietnamese buyers are showing doubt that import PE has reached the bottom pointing weak domestic ground provide no support for any significant hike. At the same time, Middle Eastern suppliers are no long aggressive in pushing cargoes to this market. An international trader sold 99 tons of Saudi’s HDPE blow moulding at $1040/ton CIF Vietnam, LC AS term said, “Our principal supplier is unable to meet any additional purchase inquiries due to lack of availability stemming from the recent plant issues. PE Allocation for August shipment might be very limited. We think prices could not go any lower for now.” Several buyers were also informed of no offers for Saudi and Qatari PE this week in the face of lacking cargoes.

Purchasing activities for import homo-PP in Vietnam also softer today though major Thailand maker still have a small quantity to offers. “Our regular customer have picked up sufficient quantity in the past two days and sales are slower now,” a producer source said. It is also heard that import regular homo-PP from China to Vietnam has reached $1080/ton CIF, LC AS level – a $10-20/ton increased from last week.

Coming back to Indonesia, traders are attempting to increase import homo-PP prices for non-dutiable origins to this market in spite of resistance from buyer. Philippines homo-PP sees $10/ton higher to reach $1130/ton CIF Indonesia, LC AS term, which is higher than local materials available in distribution market. “Therefore, we have not been able to conclude any deal at the new offers. Competition is fierce between local and import cargoes, which is capping the up-trend.”