Asia Daily PP PE Report 17 Feb 2016

In China, futures prices on Dalian Commodity Exchange extended the third consecutive day of weakening with PP futures down CNY99/t ($15/t) and LLDPE futures lose CNY65/t ($10/t). Contract number 1605 for both PP and PE settled at CNY6221/t ($814/t without VAT) and CNY8550/t ($1119/t without VAT) respectively. 

Continuous weakening of futures trading has also spread to local spot offers in which domestic sellers elected to cut prices for both PP and PE by another CNY100/t ($15/t) from yesterday. The bright side is that more converters are reported to have resumed production today, although purchasing activities are still disappointed. A trader from Zhejiang commented, “Today we manage to conclude some deals in local market as our customers are slowly returning to work. We are not planning to export coal-based PP to Southeast Asia market at the moment, as prices are not so attractive to buyers. Sentiment is rather weak and we hope market will improve once buyers completely return to their desk.”

In the import market, most offers are very firm as international sellers claim limited supply. A trader from Shanghai reported, “Supply for HDPE grades appear to be more comfortable than other material, hence we believe that HDPE prices will remain at the lower end of the range. Futures and local prices continue to soften and might pressure import market, therefore, we prefer to maintain conservative stance until have clear market direction.”

In Southeast Asia, buyers are proceeding with extreme caution and many are expressing the concern over the sustainability of the current firming trend. In the PP market, Saudi homo-PP is being offered at $880/t CIF Vietnam, increased $20/t compared to the beginning of the week. A buyer received the new prices said, “We are not planning to purchase at this level as we think volatile energy market might hurdle any significant hike. We are considering to replenish a small quantity for Middle East cargoes if we can obtain the $850/t level.” Non-dutiable cargoes are now commonly standing above the $900/t level; however, it is not very catchy for buyers.  

In the PE market, there is limited number of deals reported with most sellers are maintaining very firm stance on their offers. Buyers on the other hand show little confidence in the market outlook in the near term with a Philippines buyer commented, “Demand prospect is rather cloudy in the absence of Chinese buyers, hence Southeast Asian customers prefer to be on the sideline waiting for clear market direction. We think that international sellers might be able to achieve some small hike by gradually lifting their offers. Any significant increase will bump into buyer’s resistance.”   

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