Asia Daily PP and PE Overview 2 November 2017

In China, futures market mobilises to the positive zone as expected in the previous session. Contract 1801 for PP gained CNY85/ton ($13/ton) to close at CNY8815/ton ($1142/ton without VAT) while LLDPE contract added CNY110/ton ($17/ton) at CNY9645/ton ($1249/ton without VAT).

Buying focus in domestic spot market remain concentrating on cargoes at the lower end of the overall price range, and interestingly, domestic producers decided to step back on spot PP, PE prices by as much as CNY100/ton ($15/ton) despite stronger futures trade. All eyes are on the potential impact of strict environmental compliance on manufacturing activities in the Northern China area – where players considered as a basket for agricultural film sector.

In the import market, import offers for Middle Eastern HDPE film once again surged to multi-months high levels after a brief cool down, reaching $1280-1290/ton CFR China, TT in advance term. “These cargoes are from traders, which meant to arrive by end of the month. However, the off-take rate is very low. Such aggressive stance might shy buyers away and therefore, we are holding back the cargoes until having clearer outlook,” a trader said.

In contrast, import LLDPE and LDPE film market is facing tremendous pressure with a major Qatari producer cuts offers for second time in a row this week, reflecting the weakness in demand for these grades.

Meanwhile, international suppliers for homo-PP are showing no interest in offering discounts claiming lack of allocation. “We bid for $10/ton discount on Oman homo-PP to $1130/ton CFR China and the supplier just show reluctancy. Market is getting calmer and we fear that continued falling propylene costs would cast more effect than firmer energy complex,” a trader said.

In Southeast Asia, couple of regional producers decided to offers small discount of $10/ton on import homo-PP to Vietnam and Indonesia while most other overseas sellers yet to show any intention to adjust prices.

Philippines homo-PP concluded at below the $1200/ton threshold in Indonesia, at $1190/ton CIF, LC AS terms – a $20/ton reduction from initial offers. Such development has been long awaited among buyers, who are now pressuring for further cuts. “This is because local traders are offering at relatively competitive levels and we believed that downward pressure on import cargoes might persist in the near term,” a buyer commented.

At the meantime, Thailand homo-PP cargoes are sold at $1160/ton CFR Vietnam, LC AS term, $10/ton drop week on week. “Compared to dutiable cargoes, this material is much more competitive. The shipment is set to arrive Vietnam by end of the month and we hope buying interest fro ready cargoes from local buyers to be healthy in December,” a trader commented. Market is on a tug of war and suppliers are holding tight on the supply side for support. However, with softened upstream propylene costs and persistent weak demand, buyers are expecting a small scale discounts to emerge in the coming weeks.

The regional PE market seems more stagnant though with the recent surge in import offers for HDPE film to China, Southeast Asian buyers started taking action. “However, most calls are for checking prices and availability with limited actual deals. We plan to offer Middle Eastern HDPE film at $1280/ton to Southeast Asia, and many of our customers are not responding positively to the price idea,” an international trader said.

Besides, regional converters that active in exporting end products to the Western market are enjoying healthy number of end product orders, in line with the year-end festive season. A plastic bag maker informed, “Demand is good, however we hope to obtain additional discount before fresh buy. At the moment, we are consuming on hand inventories.”