Asia Daily PP and PE Overview 6 November 2017

In China, futures market continues to firm up with January delivery contract for PP surged CNY197/ton ($30/ton) to reach CNY9105/ton ($1172/ton without VAT). LLDPE contract jumped CNY175/ton ($26/ton) to close at CNY9870/ton ($1270/ton without VAT).

Domestic spot market is rather active. Traders reported high number of phone inquiries, and decided to lift offers for PP by as much as CNY200/ton ($30/ton) and CNY100/ton ($15/ton) for PE. “We managed to sell few hundred tons of homo-PP and LLDPE film without negotiation today. Market would continue to stay firm in the coming days, hence we prefer to hold back on some quantity,” a trader commented.

Supply for HDPE film is drying up in domestic ground, especially locally held Iranian cargoes. In fact, these parcels could easily fetch CNY400/ton ($60/ton) higher than locally produced materials though players started raising expectation for a peak. “Raw material costs have been surging too high while our customers are not willing to accept higher pries. We are aware of the supply condition, at the meantime, we are unable to accept any further hike,” a converter said.

The import market on the other hand, does not seem to be as active as the local sector despite several deals for dutiable homo-PP are reported at $1130-1140/ton CFR China term. “Thanks to the strong local market sentiment, import market gains some support. At the meantime, offers above the $1150/ton mark attract very limited interest,” a trader said.

In Southeast Asia, there are very limited numbers of new offers reported on the first trading day of the week. However, it appears that Vietnamese converters started looking for import homo-PP cargoes as more become convinced that market might have little room for further reduction.

A woven bag manufacturer purchased nearly 1000 tons of Saudi Arabia homo-PP yarn cargoes at $1150/ton CIF Vietnam, LC AS term late last week, informed, “We are still short of quantity and in need to acquire another 1000 tons of near shipment cargoes. We are talking to a Thai producer at the moment and hope to close deals soon. Export orders for our end product is regular.”

Several other converters reported to have comfortable stocks until end of December and currently planning to make fresh replenishment in the coming week. “We think it is less likely that import offers could breach below the $1150/ton threshold and therefore we are planning to restock soon. At the meantime, we are monitoring further development in China market for any sign of a rebound.”

The import PE market remains relatively stable and HDPE film is becoming even tighter with time. Local traders in Indonesia reportedly implemented IDR270,000-400,000/ton ($20-30/ton) hike on HDPE film cargoes despite a major local producer maintain weekly offers unchanged. A number of HDPE bags makers contacted by CommoPlast raised the concern that supply for HDPE might be tighter for longer and that they might need to accept the hike to make replenishment given insufficient inventory on hand. A converter received locally held Malaysian HDPE film at IDR17,600,000/ton ($1300/ton) without VAT, FD Indonesia, cash term said, “We are planning to restock for December production. Our regular supplier is not having cargoes, which might continue to keep prices on the stable to firmer trend in the near term.” Other buyers share similar intention to make purchases within this week.

Thailand PE offers to Vietnam see little changes from last week at $1200/ton for LLDPE film, $1290/ton for LDPE film and $1260/ton for HDPE film, all based on CIF, LC AS term. “All cargoes are for late December shipment. Our supplier is willing to negotiate on all other grades except for HDPE film, due to limited supply. Ethylene costs have shown signs of bottom out and we hope this, together with strong energy market, could stimulate buying interest.”