Direction of spot PP and PE prices in Asia unclear, post-holiday trading

23-Feb-10

The direction of spot PP and PE prices in Asia remains unclear in the first days of post-holiday trading as sellers differ on their confidence over medium term demand outlook, as per Chemorbis. Polymer demand in Asia, that faded ahead of the Lunar New Year holidays, remains lackluster as the market awaits return of most buyers post-holidays. Despite expectations by the sellers to see converters return to the market to re-stock cargoes shortly, traders are moving in to speed up sales. Several traders are offering previously bought stocks at prices well below the producer price level even as buyers remain hesitant about stocking up for the present despite low inventory levels. The import market has been particularly quiet as traders and producers are reluctant to announce official offers in view of the current uncertainty in the market. In Southeast Asia, a Thai producer who had been offering at the upper end of the import range for homo-PP and HDPE film, reduced prices on Monday to move back in line with the general market level. Offers were cut for PP raffia by US$20/ton and by US$20-50/ton for HDPE film owing to the lack of buying interest and price enquiries. Another major Southeast Asian producer is unprepared to announce new offer levels, waiting to see market development over the next few days. An Indonesian producer reported cutting offers for HDPE film by US$10-30/ton when compared with the pre-holiday period and LLDPE film offers by US$30/ton. These reductions have been done on the low end while keeping the high end of their offer levels steady. In Indonesia’s PP market, the producer price level remains steady from the pre-holiday period although converters report that distributors are willing to give discounts of US$30-60/ton from the producer price level. In Vietnam, a distributor reported cutting their LDPE film offers by US$52-78/ton while lifting their LLDPE film offers by US$26-52/ton, bringing local offers for LLDPE to par with local offers for LDPE. Though domestic markets have seen more activity, no clear direction has yet emerged. In China, producers reported lifting their local offers for both PP and PE by around CNY50-200/ton (US$7-29/ton), citing higher crude oil prices and their expectations of firming demand as support for their price increases amid rising LLDPE futures prices. Currently, buying interest remains muted.