Asia Daily PP and PE Overview 2 October 2017

There are no trading activities in China as players are away for National Day holiday and Mid-Autumn Festival. Market would resume on 9 October.

In Southeast Asia, import ground sees very limited movement, as suppliers are not active in giving new offers on the first trading day of the week. Most activities are developing within regional domestic markets while players are taking time to analyze the possible impact of the recent drop in ethylene costs.

Ethylene based on CFR Northeast Asia retreated from six months high last Friday due to the absence of Chinese buyers and sluggish demand condition from most downstream derivatives. “We fear that this is just the beginning. Buyers would be psychologically affected despite other strong fact that overseas supply is very tight. Local traders are loosening their stance on the arrival of previously purchased lower costs cargoes,” a Vietnamese trader commented.

There have not been any major price cuts in domestic Vietnam market, however, if ethylene costs continue to fall, it is likely that traders might have to concede to larger discount in order to bring buyers back. “Demand is very slow and price reduction has been taking place below market surface. We are waiting for the right prices to make replenishment in preparation for the year end orders,” a buyer added.

Meanwhile, domestic producer in Indonesia maintains PP and PE offers at stable to firmer trend claiming limited supply. However, distribution market does not following the path set by producer, as traders elected to offer IDR200,000/ton ($15/ton) discount on cash payment deals for both HDPE and LLDPE film. “We do not see the necessity for traders to cut prices as it is high demand season for flexible packaging sector. Especially when PT. Lotte Chemical Titan Nusantara is still running at low rate, restricting local supply. We prefer to monitor further before taking concrete decision,” a trader said.

It is clear that overseas suppliers are facing tremendous difficulty in achieving full hike target for October shipment with the current condition in local grounds. However, no measure has been taken to facilitate sales process so far. An international trader maintain import offers for Saudi HDPE film at $1230/ton and LLDPE film at $1220/ton, CIF Vietnam, LC AS term added, “We received many calls today, mostly to check the availability of discounts instead of confirming cargoes. Our principal supplier has not agreed to any adjustment and buyers revert to the wait and see position.”