Asia Daily PP PE Report 16 May 2016

In China, futures prices on Dalian Commodity Exchange reverted the firming trend in the previous week to settle at lower level in today’s trading session. Contract 1609 for PP closed at CNY42/ton ($6/ton) reduction to reach CNY6776/ton ($888/ton without VAT) while LLDPE contract closed CNY170/ton ($26/ton) lower at CNY8030/ton ($1053/ton without VAT).

Domestic producers announced price lists at CNY50/ton increased for PP parcels, but elected to adjust PE prices down CNY50-100/t ($8-15/t). Sentiment has not improved as expected and coupled with the falling futures market, players are turning negative on the market prospect for the remaining of May.

A trader based in Beijing commented, “Despite firmer pricelist, we still maintain our PP offers unchanged with hope to attract buying interest. We were expecting that with 13 local PP plants go off-line during April and June period, the market should have a solid support to at least sustain the stable trend, however, we got really disappointed. Most of these plant shall resume production by second half of May, and for this reason, we are not very optimistic about the near term outlook. We plan to deplete on hand cargoes and withdraw from the market to monitor further development.”

There is very limited number of offers observed in the import market, yet sources reported seeing some forward selling activities. A converter in Yantai received homo-PP offers for Indian origin at $950/ton CFR China, LC 30 days and Saudi Arabia origin at $975/ton LC 90 days term. The source said, “We also received forward selling offers at below $930/ton level, yet domestic cargoes still appear to be more competitive. We are not in rush to make additional purchase as we believe that market might see additional reduction in the coming days.”

Players in the PE market informed about active American supplier, who are seeking to sell LLDPE cargoes to China recently. A trader in Ningbo said, “We are considering to purchase some quantity if prices are competitive.”  

In Southeast Asia, market started to carve deeper into the weakening trend with most offers emerged on the first trading day of the week are at stable to softer levels. Indeed, import offers for Middle East LLDPE film to Vietnam has plunged more than $50/ton compared to last week to reach $1160-1170/ton CIF Vietnam, LC AS term. A buyer said, “We are quite surprised with such abrupt movement as supply for LLDPE film in general is still not sufficient. Sellers might be worrying about the medium term outlook given softening ethylene costs. We are considering to make a small purchase if there is room for negotiation.”

Domestic PE offers in both Vietnam and Indonesia markets open new week with reduction as persistent weak demand is taking its claims on prices. A Vietnamese trader cut locally held LLDPE film and HDPE film prices by VND200,000/ton ($9/ton) compared to last week said, “We haven’t been able to close any sales these few days. Re-export cargoes are coming very frequently at competitive levels, fuelling buyer’s concern regarding near term outlook. We prefer not to take position at the moment to avoid any price risk.” Meanwhile, domestic LLDPE film and HDPE film in Indonesia recorded approximate $60/ton and $40/ton reduction respectively from last week.

The regional import PP market has not seen any major undertaking on the first trading day of the week, however, offers at the upper end of the overall range have now stepped back on stiff market resistance. Indonesian buyers received fresh homo-PP offers from a major Thailand producer at $30/ton lower than last week at $1190/ton CIF Indonesia, LC AS term. A trader said, “Local producer has also cut domestic prices as much as $50/ton today. We prefer to buy prompt cargoes given the uncertainties in the medium term outlook. Therefore, import cargoes are not of our priority at the moment.” Players in the country also reported seeing a slight pick up in local demand, especially for homo-PP yarn grade.

In the Plant Status news, Philippines’s JG Summit has shutdown its 190,000 tons/year PP unit since last week for a scheduled maintenance. The plant is expected to remain off-line till end of the month.  

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