Asia Daily PP and PE Overview 15 June 2016

In China, futures prices on Dalian Commodity Exchange continue to follow diverged direction as contract 1609 for PP extended the weakening trend while LLDPE advanced on positive expectation. PP futures settled CNY48/ton ($7/ton) lower at CNY6821/ton ($885/ton without VAT) wile LLDPE closed at CNY8390/ton ($1088/ton without VAT), some CNY90/ton ($14/ton) higher.

Domestic market continues to gain momentum with spot offer from local producers added CNY50-100/ton ($8-16/ton) from yesterday increases. Demand side, however, is reported to be slowing down which players blamed to the psychological effect of weaker energy and futures values.

A converter in Fujian commented, “We are buying container by container at the moment as we think falling futures market might limit any large extent of price increment. Our end product is moving pretty slow amid off-peak season; yet we are not expecting market to revert the trend, especially when sellers are not under inventories pressure.” Several traders contacted by CommoPlast are reporting dissatisfactory number of deal concluded today, in spite of that, non showed willingness to give discount after three consecutive session of strong selling.

In the import market, Indian homo-PP concluded at $920/ton CFR China, LC 30 days term. A buyer purchased the cargoes said, “This is so far the lowest level we get for main-stream cargoes. We also received Korean material offer at $1010/ton CFR China; however, this is way above our acceptance level. We are trying to reduce our dependency on the import market to take advantage of the currency exchange rate in domestic ground.”

There is very limited number of offer for import PE reported today, including HDPE film. Trading activities in the import market remain limited compared to domestic ground despite continuous firming trend observed in local offers recently. Exporters also find it difficult to generate sufficient margins given higher costs.

In Southeast Asia, sentiment remains firm as the week proceed, however trading activities is a little lag, especially for PE due to lack of fresh offers in the market. Demand for LLDPE film is reported to be healthy while players continue to complain about lack of availability from international market. A trader received offer for Philippines HDPE film at $1150/ton CIF Vietnam, LC AS term informed, “We have been checking with our regular LLDPE suppliers but new offers will only be announced next week. Demand for this grade in domestic is good, however, we are running low on inventories now.”

Malaysian buyers are showing very cautious stance when it comes to making fresh purchases as the Ramadan holidays is around the corner. A converter reported seeing overall demand for his end product dropped about 10% compared to the same period last year said, “Purchasing activities are slowing down and we are expecting to see further discount from local producers in the near term. Meanwhile, we are negotiating with our international suppliers to obtain a small quantity of PE cargoes before go off for holidays.”

In the PP market, a major Saudi Arabia producer announced fresh homo-PP offer for August shipment to Vietnam at $40/ton higher than last week to reach $1020/ton CIF, LC AS term. A buyer added, “We are placing bid at $40/ton lower to replenish a small quantity and now waiting for our supplier feedback. General sentiment in the PP market has somehow slowdown a little compared to previous week, as most buyers are comfortable with their stock. Yet, we are not expecting any down trend in the near term in spite of weaker energy values.” Vietnamese buyers also reported seeing a vague signal of improved homo-PP supply this week, therefore, many have decided to step back to monitor further movement.  

Players in Indonesia meanwhile appear to be negotiating for the final purchases before the holidays start. There will be road ban imposed from 27 August till 18 September, in which delivery would be the main issues. A domestic trader said, “We are now focusing on clearing the backlog and we think market might not be able to firm up significantly given the peak seasonal demand has come to an end. Besides, competitive import cargoes are capping the opportunity for local sellers to adjust offers up.”

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