Asia Daily PP PE Report 19 Feb 2016

In China, futures prices on Dalian Commodity Exchange recorded an impressive jump today with PP futures increase CNY161/t ($25/t) and LLDPE futures leap CNY275/t ($42/t). Contract number 1605 for both PP and PE settled at CNY6311/t ($827/t without VAT) and CNY8720/t ($1143/t without VAT) respectively.

Domestic offers for both PP and PE continue paving the softening trend and reduced additional CNY100/t ($15/t), marking the fourth consecutive day of weakening local prices. However, sentiment started to improve with expectation that buyers would return to the market in the coming week and support market prices.

A trader in Shanghai said, “We technically stopped giving discount in the second half of the trading day after seeing futures market rally. We expect to see firmer spot market in the coming week with the presence of buyers, however, we remain conservative about the medium term outlook.”

Another trader in Zhejiang sold Indian homo-PP at $840/t CFR China, TT term added, “Supply from international suppliers is rather limited recently and together with firming futures market, we believed that upward adjustment is inevitable in the coming week. We limit our discount for local buyers by only CNY50/t ($80/t) today considering the market prospect.”

In Southeast Asia, the PP market is pretty happening with most overseas suppliers claimed limited allocation which encouraged them to maintain firm stance on their offers. A Southeast Asian sold homo-PP to Indonesia at $970/t CIF, LC AS term said, “We are not willing to negotiate on our PP cargoes as we believed that unexpected shutdown at one of the major Thailand producer and several other production issues might keep supply in check in the near term.” Meanwhile, other international suppliers from India and Middle East appear to be not in the negotiation mood. In fact, buyers are reporting that these suppliers are insisting on their offers level at $890/t and $880/t for homo-PP cargoes without any discount.

The PE market is relatively calmer with most suppliers have yet to announce new prices for March shipment. However, the general expectation is that prices might extend the stable to firm trend with the support from heavy maintenance shutdown schedule from Feb to Apr 2016 (Kindly refer to Production Status section for detailed information.) A regional trader commented, “The scheduled progressive shutdown at PTT Thailand’s plants might support firmer offers in the near term. Yet, we have not seen any pick up in demand in the region. We are monitoring further market movement before making decision.”    

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