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In China, futures prices on Dalian Commodity Exchange bounced back today with contract number 1605 for PP closed at CNY62/t ($9/t) higher to reach CNY6421/t ($840/t without VAT) while LLDPE futures increased CNY65/t ($10/t) to CNY8815/t ($1154/t without VAT). 

Spot PP cargoes in domestic market are pressurised by an increased inventory level, which resulted in a CNY100-150/t ($15-23/t) reduction in the offers today. The LLDPE market in on the other hand; continue to advance CNY100/t ($15/t) leveraging on healthy demand during agricultural season in Northern China.

A trader in Shanghai said, “It is interesting to see local and import PP market operates on a diverged trend in which we expect a correction to take place in the near term. Local inventory continues to build up despite a good coal based auction was reported these two days. We have yet to see demand from converters and most cargoes takers these days are traders.” In the import market, tight supply has pushed deals concluded at higher level reported at the beginning of the week with Indian and Saudi Arabia’s cargoes closed at $850/t CFR China, LC AS term.

Another trader added, “We do not receive much enquiries from converters these days compared to previously. We think high domestic inventory level might continue to put pressure on the sentiment in the coming days.”

In Southeast Asia, couple of major producers have sold out March allocation to regional customers, from which no further offers available from these suppliers this week. A Thai maker said, “We will only resume offering for April shipment by next week and due to limited supply, we expect some small increase in the next opening.” Another Malaysian PE producer added, “We have completed transactions for our available LDPE film cargoes to Vietnam at $1130/t CIF term and we are not having any stock in hand now. Ethylene supply is pretty tight at the moment and we believed that this would be the main factor supporting firming trend in the near term.” Many converters in the flexible packaging sector reported to have purchased sufficient material for the coming month and at the moment putting their purchases on pause waiting for end product orders to come. One of the sources said, “Our customers are splitting their orders into monthly basis and what it means to us is that we will have to wait for the order to come before replenishing raw material. We expect LLDPE film price to rise in a faster pace than HDPE film as we are hearing more Iranian HDPE cargoes are coming after the sanctions were lifted.”

The PP market remains on a firm note with very limited discount being offered to serious buyers. However, it appears that purchasing activities are being shackled as players take more caution toward fresh replenishment. An international trader said, “Our regular supplier is not having sufficient supply due to lack of propylene monomer. However, demand in the near-by China market is not picking up which sounds a bit worrisome to us. We prefer to stay conservative on PP market in the near term.”

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