Asia Daily PP and PE Overview 12 September 2017

In China, futures market rebound from four consecutive sessions of falling. January delivery contract for PP jumped CNY217/ton ($33/ton) to reach CNY9380/ton ($1228/ton without VAT). LLDPE contract reached CNY10180/ton ($1332/ton without VAT), regained some CNY195/ton ($30/ton) in value.

Offers for both PP and PE in domestic spot market remain largely unchanged from the previous session though trading activities see no drastic movement yet. In line with the rebound in futures trading, spot sellers are attempting to limit the sales volume, believing that prices shall firm up in the near term. A BOPP sheet manufacturer informed, “Demand for our end product is satisfactory and we might need to source material soon to maintain safe inventory levels. We think with the current supply and demand condition, it is unlikely that prices could face any major correction.”

Traditionally, players would wary about the accumulated supply condition after the long National Day holidays, however, there is very limited discussion regarding the issues this time. “There are several shutdowns at local coal based PP and PE plants, while import arrival for Iranian cargoes is facing serious delay, which might keep the tightness in place even after the holiday,” a trader said.

In the import market, there are very limited number of new offers and a major Saudi Arabia producer claimed to have sold some quantity of LLDPE film at $1230/ton CFR China, LC AS term. Such stout acceptance is attracting more overseas cargoes to China, which might indicate improved supply condition in this market in the medium term.       

In Southeast Asia, the general sentiment is firm though the purchasing power seems dropping as buyers are becoming more cautious as import offers continue to climb. Import PE to Vietnam below the $1200/ton mark is gradually disappearing, leaving many buyers in question whether this trend is sustainable. CommoPlast data shows that the average import offers for both HDPE and LLDPE film to Vietnam, based on CIF, LC AS term are currently at the highest levels since early March this year, just before market started to slip.

A Saudi Arabia producer open offers for LLDPE film at $1230/ton, up $60/ton from deals concluded last week and there is minimal respond from buyers’ side. An international trader offered on behalf of the producer informed, “It is understandable that Vietnamese buyers are not interested in the current prices as many have made sufficient purchases earlier. Our principal supplier has therefore sold all the 544 tons to China, where buying interest in much healthier.” The same producer also implemented $50/ton hike on homo-PP offers, to reach $1180/ton CIF Vietnam LC AS term and sold out the quantity within 15 minutes from the price announcement time.

“Most other producers from Middle Eastern and India are keeping import homo-PP offers to Vietnam at $1180/ton CIF term, creating a general perception that market is stabilizing. However, with deals reported at $1180/ton today, it is likely that new offers for the coming week might witness a small increment,” a Vietnamese buyer said.

In Indonesia, import homo-PP prices below the $1180/ton CIF, LC AS term for dutiable origins are becoming rare and even with a totally chilled sentiment here, suppliers are giving no way to entice sales, claiming limited supply. A trader commented, “We have sold out Indian and South Korean cargoes and currently await fresh offers. We think the firming trend might spread into October consider the current supply condition. As long as China still in need on material, we are optimistic about the near term outlook.”

Another Saudi Arabia producer announced new homo-PP prices to Indonesia t $1230/ton CIF, LC AS term and buyers are shock with the offers. “This price is higher than Southeast Asian cargoes and might face stiff resistance in Indonesia. We are monitoring further movement before making any major decision,” a market source said.