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In China, futures prices on Dalian Commodity Exchange posted the first losses after a week long of rally with PP futures reduced CNY57/t ($9/t) compared to the previous trading session while LLDPE futures plunged CNY140/t ($22/t). Contract number 1605 for May delivery settled at CNY6999/t ($919/t without VAT) and CNY8940/t ($1173/t without VAT) for PP and LLDPE respectively.

Physical spot offers for both PP and PE in domestic market remain mostly stable, yet, traders elected to give CNY100-200/t ($15-30/t) discount in the early part of the trading day to entice demand after seeing large drop in futures trade. Demand is reportedly weakening as buyers become more cautious about the market movement now.

A trader in Linyi reported, “Buying interest in domestic market has declined considerably compared to last week, and alongside with falling futures prices, stressed traders feel the need to cut their prices to encourage sales. We personally think that the current firming trend might not halt so soon as increasing energy value, firmer upstream market and tight supply are preventing any possible significant reduction.”

In the import market, a major Thailand producer has lifted their HDPE film offer by additional $5/t after implemented $30/t hike last week to reach $1145/t CFR China, LC AS term. A trader in Shanghai purchased some quantity at $1140/t with the same term said, “We decided to replenish a small quantity as we think that prices might move higher in the coming days considering the supply and upstream market conditions.”

In Southeast Asia, the firm sentiment remains in place with steady ethylene costs are giving more support to the upward movement of the downstream PE market. A major Southeast Asian announced new prices to regional buyers with $20-30/t increased compared to last month to reach $1150/t for HDPE and $1200/t for LDPE film, all on CIF SEA term, LC AS. Source from the producer commented, “Our plant is operating at regular rate and we see it is more difficult to conclude deal for HDPE than other grades. We are monitoring the market response before making further decision.” Meanwhile, another regional producer is planning to implement some $10/t hike on their HDPE cargoes to Vietnam. “Last week we managed to close some small deals for HDPE to Vietnam at $1150/t CIF, LC AS term, and with the recent upsurge in upstream costs, we think our customers would be able to accept a small hike,” a Thai producer informed.

In the PP market, limited supply continues to elevate the whole market with a buyer from Indonesia said, “For non-dutiable cargoes, we are now looking at above $1000/t level on the CIF Indonesia term. There is a sign of slow down in demand in the near-by China market, but we think that sellers will not rush to reduce their offers in the absence of sales pressure. Our Thai suppliers are not having quantity at the moment and plus with the production issue in one of Singaporean plant, we think that regional supply for PP will remain tight in the coming days.” Another buyer in Vietnam added, “We are checking on new import PP offers and one of the Saudi Arabia suppliers informed that they might only announce new price next week, while Indian seller replied that they are not having any cargoes to offer at the moment. Local prices are also firming up gradually, however we see there is so much of an uncertainty in market outlook in the coming month. We hope the current firming trend would prove to be sustainable in line with tight supply condition and firming energy market.” Market rumor has it that Indian and Middle East PP suppliers are diverting their cargoes to Latin America for a better margin, which resulted in reduced allocation for Asia market.

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