Asia Daily PP and PE Overview 17 July 2017

In China, futures market extended the firming trend from last Friday with September delivery contract for PP closed at CNY61/ton ($9/ton) higher, reaching CNY8120/ton ($1025/ton without VAT). LLDPE contract gained additional CNY15/ton ($2/ton) to close at CNY9165/ton ($1157/ton without VAT).

There have been more activities in domestic spot market today, players said and sellers lifted offers for both PP and PE by up to CNY150/ton ($22/ton). Arbitrage traders are especially active due to healthy price gap between spot and futures trading. A trader reported, “We managed to conclude a good number of deals today to local buyers while still monitoring before setting import offers. It is still uncertain on how far would market journey north, one thing clear is that the lower end of the overall price range is no longer available.”

In the import market, traders claimed to have sold Indian HDPE yarn at $1125-1130/ton CFR China, LC AS term, “We are able to achieve these prices due to tightening domestic supply. Other neighbouring markets, including Southeast Asia, have yet to reach this level.” The source added that in spite of strong resistance from market, there might be additional increases in the coming days.   

In Southeast Asia, there are very limited number offers observed on the first trading day of the week while market appears to be in transition. Suppliers are attempting to lift prices pointing to improved demand condition in China and tightening general supply.

An international supplier opened offers for Iranian HDPE film at $1120/ton CIF Vietnam, LC AS term. The source was collecting bids for this cargo at $1050/ton in the previous week. The trader added, “Buyers are resisting very strongly toward the offers, however our Chinese customers have accepted this prices as we are not planning to make any downward adjustment.”

Another South Korean producer maintain offers for HDPE and LLDPE film at $1115/ton CIF Vietnam with a buyer commented, “We have not taken any position so far as we are not confident about the near term outlook in local ground. We are still selling at loses and we hope firmer import market would support the trend.”

The regional PP market is witnessing similar situation as several Middle Eastern suppliers become more active in giving new offers. A trader claimed to have sold Saudi Arabia homo-PP at $1070/ton CIF Indonesia, LC AS term said, “Buyers are very reluctant in accepting the hike and we find it hard to implement any further increment at the moment. At the same time, we are not facing any pressure, hence we might be firm on the remaining cargoes.”

At the meantime, domestic producer in Indonesia lifted local homo-PP prices two weeks in a row and there are reports of improved trading activities. “We can achieve sales at prices above producer’s price list now,” a trader said.

There have been market talks that import offers for regular homo-PP Chinese origin has hit above the $1100/ton threshold in Vietnam, at $1145/ton CIF Vietnam, LC AS term. However, this has not been confirmed by the time this report is published. “Local market is still weak as it is the traditional slow season for woven bag sector. We are not expecting any significant pick up in demand in the near term amid the raining season. And therefore, it is difficult for us to accept import cargoes at above the $1100/ton mark.”