Print

In China, futures market remains on the firming trend for the fourth consecutive session today as investor return gradually. May delivery contract for PP gained CNY74/ton ($11/ton) to reach CNY8348/ton ($1036/ton without VAT. LLDPE contract surged CNY110/ton ($16/ton) to close at CNY9390/ton ($1165/ton without VAT).

Sustained firming futures market revives the confident among local traders, which in turn stimulate the general sentiment. In fact, it is reported that purchasing activities in local ground improved impressively compared to the past few days even with higher offers. “We could sell without any difficulties today. Most cargoes takers are traders, who have been aggressively depleting their inventories over the past month and at the moment running low on stock. We hope market could maintain the current pace for the rest of the month, setting the foundation for a rebound in April,” a trader in Shantou said. According to a private data, total PP and PE inventories at domestic major producers’ warehouses have dropped approximate 10% (or 105,000 tons) from Monday, faster pace than last week.

Another trader added, “We haven’t seen such merry sentiment in the market for sometime now. Our customers are now less cautious about the purchases. Domestic inventories are still high, however with the current buying interest, pressure would be lower.” Meanwhile, a portion of the market remain very conservative and prefer to monitor further development after the US Federal Reserves lifted key interest rate.

In the import ground, offers for deep seas LDPE film cargoes have breached below the $1200/ton threshold, standing at $1180-1190/ton for Brazilian and Russian origins. On the other hand, buyers have also started to raise buy ideas for Saudi Arabia’s homo-PP cargoes at the range $1020-1030/ton CFR China term. Offers for this origins at the moment are well above the bid levels.

In Southeast Asia, more activities reported in the PP sector as international suppliers agreed to buyer’s buy ideas levels. In fact, a major Saud Arabia producer announced fresh homo-PP yarn to Vietnam in the previous trading day at $1120/ton CIF term has conceded to $40/ton discount to close deal at $1080/ton with the same term. A distributor offered on behalf of the producer informed that they managed to sell out all the available quantity today with more inquiries coming in later. A buyer commented, “We made a purchase believing that room for further reduction is getting narrower. The lead-time for this cargo is a bit long, as shipment would only arrive in June. If more discounts become available in the coming week, we will replenish additional quantity.” 

The same producer also reportedly concluded deal for the same cargoes at $1090-1100/ton CIF Indonesia, LC AS term. It is interesting that more Indonesian buyers are returning to the market to make addition purchases, not only for direct cargoes, but also re-export material from China. A converter receiving Chinese regular homo-PP yarn at $1120/ton CIF said, “We placed bid at $1090/ton and currently waiting for the supplier’s feedback. Chinese buyers are returning to the market and this would play an important role in supporting the near term market.” Buyers across the region are having mixed perception on whether the market has reached the bottom, and many prefer to monitor the sustainability of the latest development in China.

The regional PE market is on the other hand, not sharing the similar situation as PP. In contrast, buyers remain very cautious about the near term outlook, especially amid accelerated falling LDPE film market in China. “It appears that the adjustment in the PE market has just started. Although most international suppliers have yet to expressed any intention to reduce their LLDPE and LDPE film offers claiming limited supply, we believed that the pressure is building up,” a Vietnamese buyer commented.

Couple of Middle Eastern producer has stepped back on their LLDPE film offers to Indonesia to facilitate sales process, yet no offers below the $1200/ton threshold reported. A Middle Eastern producer added, “Our supply might only come back to normal in April, however market sees little support from the tight availability as weak demand balanced up the situation. We are not very confident about the near term outlook.”