Asia Daily PP PE Report 16 Feb 2016

In China, futures prices on Dalian Commodity Exchange continue to have some minor drop today with PP futures decreased CNY65/t ($10/t) to reach CNY6281/t ($823/t without VAT). Meanwhile, LLDPE futures decreased CNY25/t ($4/t) to close at CNY8595/t ($1127/t without VAT).

Weak sentiment has forced local sellers to reduce domestic offers for both PP and PE by CNY50/t ($8/t) compared to yesterday and the number of deal concluded in both local and import market is rather limited. A trader in Xiamen reported, “Some Middle East cargoes purchased since Nov 2015 have been delayed to Feb 2016, in addition to some production issues in Southeast Asia market, we think that the supply will remain tight in the near term. However, we are also cautious as demand has yet to return.”

Another trader in Shanghai added, “Firming trend in local market appears to have lose momentum as buyers are not returning from the holidays so quickly. We received stable to firmer offers from overseas suppliers and we think market will show stiff resistance due to the fact that local inventory is building up which need time to be absorbed.”  

In Southeast Asia market, couple of regional PE makers have announced new prices with increases compared to last month in the absence of sales pressure as a result of production issues. Meanwhile, some deals for Thai HDPE film are reported at discount in Vietnam, which reignites the concern amongst players about the sustainability of the firming trend. A converter in Malaysia said, “International suppliers are attempting price hike but we are not confident about the market outlook in the near term, hence we prefer to see new development in China market before making decision.”

In the PP market, offers are also very firm with a Thai producer reported unexpected shutdown at PP line at the beginning of the week. A Vietnamese buyer received homo-PP offer at $840/t for Russian origin and $860/t for Saudi origin, CIF, LC AS term. The source added, “We are placing bid for Saudi cargoes at $850/t but we plan to buy a small quantity only as we prefer to monitor the market further before taking position. We hope that tighter supply will support the market but so far local prices cannot move up in line with the import market.”

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