Asia Daily PP and PE Overview 31 August 2017

In China, futures market extended the firming trend with contract number 1801 for PP added another CNY88/ton ($13/ton) to reach CNY9358/ton ($1211/ton without VAT). LLDPE contract jumped CNY130/ton ($20/ton) to close at CNY10175/ton ($1317/ton without VAT).

Trading activities in domestic spot market improve visibly, from which traders are limiting sales quantity with confidence that prices would continue to move higher in the next trading days. Spot offers for both PP and PE inch up CNY50-100/ton ($7-14/ton) today.

A trader informed, “There are more evidences supporting the notion that local producers might announce September delivery cargoes in the coming week with increases, and thus buyers are stocking up before the hike. Supply is tight and with coal based plants taking off-stream, market could see very few cargoes available.”

In the import market, very few international suppliers open new offers and most transactions today are from traders. In fact, a Ningbo based trading house decided to offer Taiwanese HDPE film at $1200/ton CFR China term, and with surprises, deals achieved almost instantly. “Few of our regular customers are still asking for additional quantity. The firming trend might sustain till October on the supply issues,” the source said.   

In Southeast Asia, trading activities are limited as most major market including Malaysia, Indonesia and Vietnam are entering the long weekend holiday. However, what has not changed throughout the week is the firm stance from suppliers despite stiff resistance from the market.

Producers from India and Middle East lifted homo-PP offers to Vietnam and Indonesia by $20-30/ton week on week after achieved satisfactory sales result in the nearby China market. Latest price list from the makers stands at $1160-1170/ton CIF Vietnam/Indonesia LC AS term. A Vietnamese buyer said, “We have purchased a small quantity at $1120-1130/ton for Saudi Arabia materials and have no plan to buy additional quantity in the near term. Limited supply is keeping prices on the high side and we hope domestic ground would follow the trend.” Vietnamese market will be off for National Day holiday throughout 4 September 2017.

Regional players are also evaluating the impact of the recent shutdown at a number of crackers, PP and PE plants in the USA following a catastrophic cyclone that caused heavy flood. Kindly refer to the Daily Alert section on www.commoplast.com for a list of affected plants. Most opinions are pointing to a possible prolong tight supply condition with some are looking at November timeline. “Our concern in Indonesia market is that most converters are running low on the BMDTP allocation (a government special scheme exempting manufacturers from import duties tax on a fixed quantity when purchase dutiable cargoes). Demand might fall toward early quarter 4 and we put heavy bet on the supply side to keep market firm,” a trader commented.

Similar situation is observed in the regional PE market and even with disappointed sales results; most suppliers refused any downward adjustment. An international trader maintain prices for Saudi PE at $1160/ton for HDPE film and $1170/ton for LLDPE film, CIF Vietnam, LC AS term. “We are still for market to catch up. No deals have been concluded at these levels so far,” the source said.

Meanwhile, Malaysian converters reported better end product demand from overseas customers and a source added, “Just that raw material prices are too high and therefore we only source hand to mouth basis from domestic suppliers. Prices might remain firm in Malaysia too as both major makers are carrying large backlog.”