Asia Daily PP and PE Overview 4 August 2017

In China, futures market concluded the final trading day of the week on the firm notes. September delivery contract settled at CNY8400/ton ($1067/ton without VAT), some CNY89/ton ($13/ton) higher than the previous session. Same contract for LLDPE gained CNY75/ton ($11/ton) to reach CNY9520/ton ($1209/ton without VAT).

In domestic spot market, buyers are very active in placing price inquiries seeing firming futures market, yet the number of deals concluded is rather mediocre. Sellers are still facing no inventories pressure at the moment, yet supply might slowly improve due to limited number of plant turnaround in this quarter.

A small-scale trader sold 20 tons of local homo-PP to converters said, “Market is in mid of the traditional slow season, from which buyers are very conservative about building stocks. We hope the general condition to pick up in the near term with the arrival of year-end orders. At the meantime, we are monitoring the transition of futures contract to gauge the possible quantity of material that might have been released to spot ground.”

Import market is very much stable and most traders are holding firm stance on the remaining cargoes, claiming limited availability. A trader sold Iranian HDPE blow molding at $1085/ton and HDPE film at $1105/ton CFR China, TT in advance term said, “There are not much materials available, especially for Thailand, Taiwan and Qatar origin and this would depict firmer near term outlook. Sales are not strong at our prices, however, we are not in rush to offer any discount.”

In Southeast Asia, market remain on the firming trend with suppliers continue to hold firm on both PP and PE cargoes, in spite of the fact the deals concluded at much weaker. A trader sold Vietnamese homo-PP at $1150/ton CIF Indonesia, LC AS term informed, “Customers are becoming reluctant, however, wit the current supply and upstream market condition, we think market still has comfortable room to move higher in the coming week.”

In fact, there are very few offers observed in the market towards the end of the week as majority of suppliers are said to have sold out available allocation. An Indonesian buyer added, “Offers for non-dutiable homo-PP cargoes below the $1150/ton mark are becoming scarce. Our supplier lifted offers for Philippines homo-PP three times this week, reaching $1170/ton CIF at the moment. We are not ready to accept such rapid hike and we prefer to meet immediate need from local sellers.” Sources also said that PP prices are a little too high compared to the current propylene costs, making it difficult for buyers to catch up.

The regional PE market is escalating in faster pace than expected as ethylene costs surged nearly $100/ton within this week. It is reported that supply for ethylene in Asia is tightening while Middle Eastern cargoes are heading to other markets due to better margins. The up-coming cracker shutdown at Malaysia’s Lotte Chemical Titan and Taiwan’s Formosa Petrochemical Corp might worsen the ethylene supply condition.

A Vietnamese buyer received offers for Saudi Arabia LLDPE film at $1170/ton CIF, LC AS term said, “Prices increased about $100/ton month on month and this is not workable for us. We have made sufficient purchases and might withdraw to the sideline in the coming weeks.”

Many downstream converters are complaining about difficulties they faced in lifting end product prices following the recent rebound in raw material costs. “Local producer could only fulfill half of the contracted quantity, which indicated high possibility of further price hike to come. Our end product customers are on the other hand, not willing t o place new orders at the current prices, and therefore it is hard for us to replenish materials at higher levels,” an Indonesian buyer commented.