Asia Daily PP PE Report 09 Mar 2016

In China, futures prices on Dalian Commodity Exchange have a hard rebound today after posted a large dive in the previous trading session. PP futures for May delivery increased CNY174/t ($27/t) while LLDPE futures jumped CNY265/t ($41/t). Contract number 1605 settled at CNY7057/t ($927/t without VAT) and CNY9060/t ($1190/t without VAT) for PP and LLDPE respectively.    

Domestic spot offers for both PP and PE continue to move up by CNY100/t ($15/) compared to yesterday, however, most traders contacted by CommoPlast were complaining about the slower demand and inability to close deal today. A trader in Zhejiang said, “We elected to keep our offers unchanged from yesterday, yet we could only close a small number of deals. Our customers are buying hand-to-mouth to avoid keeping stock seeing drastic movement in futures trading these days. We hope the recent firming trend could sustain longer.”

In the import market, there is minimal offer for PP observed, however PE market is relatively more active. A trader from Xiamen reported, “Our PP suppliers are not very aggressive in giving offers these days, but we are receiving abundant of PE offers for arriving cargoes on TT in advance term. We believed that suppliers would maintain very firm stance on their cargoes in the coming days in spite of reluctant buyers.” A buyer in Shanghai agreed to this point saying that sellers would rather let the market takes time to accept the higher level as there is no sales pressure at the moment.

 In Southeast Asia, the market retains the firming sentiment with a major Thailand producer announced new HDPE prices to Vietnam at $10-15/t higher than last week. The producer opened HDPE film at $1160/t and HDPE yarn at $1165/t CIF Vietnam, LC AS term and sell out all quantity available shortly after the offer without any discount. Source from the producer informed, “This time we have very limited quantity, and hence we prioritized converters without offering to traders. We see demand for HDPE film is weaker than other PE grades, however our customers accepted the price due to small quantity. We might announce new price again next week with increases.” Meanwhile, another Middle Eastern producer added, “Firming energy and upstream costs alongside with tight supply is apparently giving a solid support for the market to move higher. However, we see the real demand is not catching up with the market and it seems that Southeast Asian buyers are not having the urge to make replenishment. We think prices might continue to climb in the coming week, however, the extent of price increases might not be large.”

In the PP market, players in Vietnam are reporting a strange sense of “quietness” from international suppliers. In fact, there is almost nil new import offers since beginning of the week despite many buyers are sending in their enquiries, which clearly demonstrated a main characteristic of a “dumping market.” A trader in the country commented, “Sellers are achieving better margins in other export destinations, hence they are not having allocation for Vietnam market. Local prices continue to firm up to reach VND25,000,000/t ($1020/t without VAT) including VAT, FD Vietnam cash term. However, buyers are becoming more cautious after the energy market plunged yesterday. We prefer to stay conservative regarding the near term outlook.” Another international trader added, “We have been active in the North and South America markets in the past couple of months due to better profit margins. Even this week, netback of selling to South America market is still higher than Asia, however, demand there has been slowing down. At the meantime, Asian PP market is on the rise, hence we might consider switching our attention.”      

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