Asia Daily PP and PE Overview 27 June 2016

In China, futures prices on Dalian Commodity Exchange make another impressive hike on the first trading day of the week with contract 1609 for PP jumped CNY370/ton ($56/ton) and LLDPE gained CNY205/ton ($31/ton). Both contracts settled at CNY7784/ton ($1002/ton without VAT) and CNY9080/ton ($1170/ton without VAT) respectively.

Physical spot offers in domestic market continue to move higher as fresh price lists from local makers indicate another CNY50-100/ton ($8-16/ton) increased from last session. However, buyers started to portray stronger resistance as market enter the third consecutive week of price increment. A trader in Guangdong said, “Spot market is gaining momentum with the support from futures trade, however, we have not been able to explain the continuous firming trend observed on the Dalian Commodity Exchange recently. On the other hand, local sellers are not having any sales pressure, which open another prospect for further hike in the coming days.”

In the import market, homo-PP from dutiable origins below $1000/ton threshold is becoming scarce as strong domestic ground is backing international suppliers in lifting their prices. A market source commented, “Not only that, inadequate supply and healthy demand in the nearby Southeast Asia market is preventing any possible price correction in the near term. We remain optimistic about July outlook.”

In the PE market, a limited number of offers surfaced at $30/ton hike for Indian HDPE yarn to reach $1190-1195/ton CFR China, LC AS term. Buyers see this upward adjustment as a result of higher production costs after ethylene monomers added $30/ton last Friday. Unexpected production issues at Saudi’s PetroRabigh and Singapore’s ExxonMobil crackers are blamed to for such sudden upturn in the upstream market. For this, market is looking at relatively stronger downstream PE market in the near term.     

In Southeast Asia, market opens the new week on the firm note though buying appetite appears to be weaker as players in Indonesia and Malaysia embrace the upcoming Ramadan holidays. More fresh offers emerged from international suppliers at higher levels than last month following improved demand and tight availability.

Demand for HDPE film in Vietnam, was regarded as the weakest amongst the PE grades previous weeks, has now seeing some improvement with a distributor sold Middle East cargoes at $1110/ton CIF, LC AS term said, “Our manufacturing customers become more enthusiastic in making purchases this week and in fact we managed to sell out a very good quantity today. We expect to see better market condition in the near term in line with the traditional peak seasonal demand for HDPE film.”   

In the regional domestic markets, PE prices in Indonesia and Vietnam also journey north with a local producer in Indonesia reported, “We have already sold out June allocation by now, and our July business is also finishing. Our plant is operating at reduced rate, from which we face very little sales pressure even after the Ramadan holidays. We think this might continue to support firming trend in the coming days.”

The PP market remains on the up-trend with a major Thailand producer opens fresh offers to Indonesia with $20/ton hike from last week. A converter in the country said, “We have stocked up sufficiently till August, yet we still concern about the market trend in July as supply is really tight. Our domestic supplier has not enough homo-PP cargoes and buyers are actively pre-booking their material now.”

A similar trend is observed in Vietnam with an Indian producer lifted homo-PP offers by $50/ton to $1070/ton CIF Vietnam, LC AS term. A buyer received the offer reported; “We think we might not be able to accept this price level at the moment given the uncertainties associated with the recent Brexit event in the Europe. Domestic market has firmed up VND400,000-500,000/ton ($18-22/ton), just that our customers are showing resistance towards the latest offers, in which they are limiting the purchased quantity to minimal amid slow end product demand.”

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