Asia Daily PP PE Report 22 Feb 2016

In China, the futures market opens the new week on a firm note with PP futures advanced CNY69/t ($11/t) to close at CNY6418/t ($841/t without VAT). The LLDPE contract posted a humbler gain of CNY50/t ($8/t) to settle at CNY8830/t ($1158/t without VAT).

As per market expectation reported last week, domestic spot offers for both PP and PE increased CNY50-100/t ($8-15/t) today thanks to stronger futures trades. However, buying interest is reported to remain mediocre without any impressive movement. A Xiamen trader said, “Polyolefins prices in local market firmed up today but momentum slowed down toward the end of the trading day. Domestic suppliers are holding back their inventory hoping to sell at better margins in the near term. We need to monitor further development after the Chap Goh Mei celebration today before can judge the sustainability of the current trend.”

Import market sees firmer trend for both PP and PE with limited offers from international suppliers. A trader in Shanghai commented, “Import PE offers move higher compared to the pre-holidays level in spite of weak buying interest. Our customers are very reluctant to accept the new prices and this could be a potential minus point for the market in the near term. Besides, our Indian PP supplier is not having much allocation for China market this month.”      

In Southeast Asia, purchasing activities have yet to see any significant improvement on the first trading day of the week, however, sellers are maintaining very firm stance on their offer claiming limited supply to be the main supporter. In the PP market, a major Saudi Arabia producer open the new week with additional $10/t increased after implemented $20/t hike last week on their homo-PP cargoes. A Chinese trader sold coal based PP to Vietnam at $890/t CIF, LC AS term said, “We have been negotiating for a week and managed to conclude deal today. Demand is not very strong but we believed that limited supply would continue support the market in the near term.” Local offers for homo-PP in both Vietnam and Indonesia continue to firm up in line with the international trend, however buyers stay cautious with hope to see clearer state of demand in the near-by China market.

Firming ethylene cost stemming from a series of plant shutdown and limited supply has pushed the PE market higher today. In fact, a major Middle East producer announced new prices for PE cargoes at $30-40/t higher than last month to reach $1100/t for HDPE film and $1100-1110/t for LLDPE film, CIF SEA, LC AS term. Regional market players are complaining about the tight availability of LLDPE film cargoes with a packaging converter in Indonesia said, “Local LLDPE film price has increased by $45/t in the span of two week time and this trend might last in the next couple of weeks due to reduced supply from international producers. We have purchased sufficient quantity to last till end of March and we might replenish additional quantity depending on the exchange rate condition. Demand for our end product is regular at the moment.”         

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