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In China, it appears that investors started to return to futures market, which is reflected in a drastic surge in the number of transaction for both PP and PE contracts. May delivery LLDPE futures remain unchanged from last Friday to settle at CNY9210/ton ($1139/ton without VAT), meanwhile, PP futures added CNY65/ton ($9/ton) to reach CNY8245/ton ($1020/ton without VAT).

Sentiment in domestic spot market sees some improvement though offers for both PP and PE continue to inch lower by CNY50-100/ton (7-14/ton). Since early February, domestic homo-PP yarn in local China market has dropped by CNY800/ton ($116/ton) bringing the lowest level to CNY8000/ton including VAT, EXW China, cash term, which is equivalent to $990/ton without VAT with the same term. Even with such reduction, market is still struggling with the high inventories levels. Hope now concentrating on the heavy maintenance shutdown at 13 PP plants in local China that resulted in an estimated production loss of nearly 173,000 tons during February and March. A trader commented, “We sold some quantity today mostly to traders as converters are still not very active due to slow end product business. We hope that futures market could sustain the firming trend in the coming day, from which sentiment might improve.”

In the import ground, several traders have down adjusted offers for Saudi’s homo-PP by $50-60/ton from last week to reach $1050-1060/ton CFR China, LC AS term with a converter added, “Even after the reduction, this offers are still higher than local material. At the moment, we are still having about 2000 tons of inventories on hand and would only source on need basis from domestic suppliers. Our end product business remains weak.”

In Southeast Asia, there are very limited transactions observed on the first trading day of the week as regional buyers continue to adopt cautious stance toward fresh replenishment. Falling energy values are affecting buyers’ confidence in the near term outlook, yet overseas suppliers are not eager to implement any measure to smoothen sales process, except for Chinese coal based homo-PP.

In fact, most Middle Eastern suppliers remain inactive in the region due to unattractive margins compared to Europe and South Africa market. Meanwhile, Chinese material continues to pour into Southeast Asia at competitive prices. An international trader offered coal based homo-PP yarn at $1100/ton FOB China, LC AS term said, “Initial respond from Southeast Asian buyers is rather weak even though we are open to negotiation. We might need to adjust our offers to attract buying attention.” The source also reported to have some Saudi’s homo-PP to re-export at $1140/ton FOB China term.

Meanwhile, couple of Middle Eastern makers elected to maintain their homo-PP offers at $1140-1150/ton CIF Indonesia, LC AS term while holding firm stance on the cargoes. An Indonesian buyer placed bid at $1100-1120/ton with the same term commented, “We would make purchases if the supplier meet our buy idea.  Government tender for woven bag for quarter 2 is lower than previous quarter, hence demand might only hold stable in the near term.”

Meanwhile, the PE sector is rather firm and most suppliers are not showing intention to adjust their offers despite facing strong pressure from weak demand as well as falling energy and upstream costs. A Vietnamese buyer received Saudi Arabia PE offers at $1210/ton for HDPE film and $1240/ton for LLDPE film, CIF Vietnam, LC AS term said, “The supplier refused to give any discount claiming lack of availability. Domestic ground is on the other hand weakening, making it difficult for buyers to accept this level.”

Explaining to the firm stance amongst supplier, an international trader, who is active in selling to European market added, “Most suppliers are not interested in Asia market at the moment due to sluggish demand condition. We have been making better margins in European market for several weeks; however, it appears that buying interest in this region is also loosing momentum this week despite higher prices. If the current condition in China persist into April, very likely that the West side would be affected as well.”