Asia Daily PP and PE Overview 31 October 2017

In China, futures market remains weak entering the second trading session of the week. January delivery contract slipped CNY105/ton ($16/ton) to reach CNY8678/ton ($1117/ton without VAT). LLDPE contract inched CNY100/ton ($15/ton) lower to CNY9510/ton ($1224/ton without VAT).

Trader reported to have been able to close a number of deals for both PP and PE at the lower end of the overall price range after offering another CNY50-100/ton ($7-15/ton) discounts. Total PP and PE inventories at domestic producers’ warehouses fell 50,000 tons to approximate 670,000 tons as of today. Such below average stock on hand might discourage local producers from implementing any significant price cut in the near term, market sources said.

There are reports that approximate 100,000 tons of previously purchased Iranian HDPE cargoes have been cancelled as the suppliers faced serious prolonged plant issues. This might keep HDPE supply in China tighter for longer, espcially when demand is strong amid the peak season. In contrast, import offers for both LLDPE and LDPE film continue to inch lower on the slope of better supply condition and weak upstream costs. A trader received offers for Thailand LLDPE film at $10/ton drop from last week commented, “Our customers are not showing strong interest seeing the weakness in futures trading. Except for HDPE, we think that the downward pressure on other PE grades might build up with the arrival of deep-seas cargoes.”    

In Southeast Asia, firming energy complex does not seem to generate sufficient support for the petrochemical market, especially regional domestic grounds. In fact, local PE offers in both Indonesia and Vietnam witness small to moderate reduction on the face of persistent weak demand. The condition might persist in the coming days, unless pre-Lunar New Year preparation speed up, players said.

Local traders in Indonesia implemented a reduction of IDR200,000-300,000/ton ($15-22/ton) on LLDPE film cargoes even with unchanged price list from a major domestic producer. Cash payment offers for locally produced LLDPE film has reached IDR17,000,000/ton ($1255/ton) FD Indonesia, without VAT. “We decided to make restock some quantity as prices are relatively competitive. Term payment offers are only IDR200,000/ton (15/ton) higher.”

Meanwhile, in Vietnam, the tightness in HDPE film supply does not help in keeping the firming trend in place. Local traders started offering discount for HDPE film parcels by VND200,000-300,000/ton ($9-13/ton) week on week. A trader closed deals for Thailand HDPE film at VND31,000,000/ton ($1240/ton without VAT), FD Vietnam, cash term said, “We used to sell at VND300,000/ton ($13/ton) higher in the previous week. Market is loosing momentum due to the arrival of previously purchased cargoes. We are not very optimistic about the near term outlook.”

There is a mixed sentiment observed in the import PP market within the region.  A Saud Arabia producer attempted to lift homo-PP offers to Indonesia by $10/ton from last week to $1170/ton CIF, LC AS term, which bumped into inevitable buyer resistance. Meanwhile, other suppliers are finding it difficult to conclude deals for Middle Eastern cargoes as most bids received are in the range $1130-1140/ton CIF term. “We are only willing to talk $20/ton discount from initial offers. We are having regular allocation this month and really concern about the near term outlook,” a distributor offers Saudi homo-PP at $1170/ton CIF Indonesia, said.

At the meantime, international suppliers reported a slowdown in buying interest in the India market and deals achieved at lower levels compared to last week. This has left suppliers with less destination choices in Asia.