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In China, futures prices on Dalian Commodity Exchange settled another trading day with a mixed direction. Contract number 1605 for PP dropped CNY45/t ($7/t) to reach CNY7338/t ($971/t without VAT), LLDPE futures on the other hand added CNY65/t ($10/t) to settle at CNY9655/t ($1277/t without VAT).

Demand in local market continues to weaken, which encouraged sellers to cut PP and PE offers by CNY50-100/t ($8-15/t) compare to yesterday to entice buying interest. Numbers of traders are complaining about the difficulties in concluding deals and in fact some are intending to deplete on-hand cargoes due to lack of confidence in the near term outlook.

A trader based in Beijing commented, “Most of our woven bag and film packaging customers has already purchased sufficient cargoes. Yet, we see end product demand is still very healthy, which means that they might need to come back for another round of replenishment in April, before ChinaPlast. Therefore, we think market just needs a break from the current firming trend to remain stable in the near term.”

Import homo-PP to China is reported to remain unchanged since beginning of the week at the level $1030-1050/t CFR, LC 0-90 days term. A trader offered Indian homo-PP at $1030/t, LC 90 days added, “We find it hard to implement any further hike since our buyers are resisting even at the current level. We are not considering any re-export activities now because there are not enough margins available amid slowdown in other regions. We think that market might find its way to a more stabilise condition in the near term.”

Weaker buying interest for PE in local market has stimulated strong need among sellers to find re-export destination with hope to maximise profit margins. a trader from Guangdong reported, “We are diverting some HDPE film cargoes to India and Pakistan these days as demand in these markets are much better. There is not sufficient buying interest in local market for us to recoup the costs, therefore, we might need to be more active in this area in the near term.”

Market sentiment across Southeast Asia region appears to be slower as players are reporting of stronger buyer resistance towards the current high price level. In the PP market, a major Saudi Arabia producer lifted homo-PP prices by $40-65/t compared to last week to reach $1135/t for yarn grade and $1110/t for injection grade, all based on CIF Vietnam, LC AS term. A buyer in the country reported, “We have purchased the same cargoes from trader at $1090/t CIF term for May arrival and we are not planning to replenish additional cargoes. We think the market is not ready to accept anything above $1100/t level, especially traders, as the energy market started to loose momentum. There is a large quantity of material would arrive main port by mid-Apr, which mean local market might see better supply.” Meanwhile, converter in the country reported receiving locally held homo-PP with VND500,000/t ($22/t) reduction compared to last week to reach VND27,500,000/t ($1120/t without VAT) FD Vietnam, including VAT, which is deemed to be more competitive than the latest offer from the Saudi maker. Even the hotness in the Indonesian market seems cooler now despite supply condition has yet to improve. An Indonesia trader said, “Homo-PP prices increase too quickly and buyers are now with sufficient material started to show little interest in such high price level. We think market might follow a more stabilise trend in the near term.”

The PE market is following a relatively stable to firm trend and limited supply is still a primary supporter lifting the whole sentiment. Most sellers claimed to have sold out April allocation for now with an international trader offered Middle East LLDPE film at $1230/t and HDPE film at $1220/t CIF Vietnam, LC AS term said, “We do not have any LLDPE film allocation this month due to some plant issue previously. The HDPE film market is very competitive due to the available of re-export cargoes from China market.” Another trader added, “We have inquired for some export quantity from a Malaysian supplier however the principal has sold out April allocation. Looking at the current demand condition, we expect the market to remain mostly stable in April.” Malaysian players are also awaiting new prices from a local maker, which is expected to be announced on April 1 with increases.

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