Asia Daily PP PE Report 11 Mar 2016

In China, sentiment on Dalian Commodity Exchange turns sour today with both contracts for PP and LLDPE decline. PP futures settled at CNY273/t ($42/t) lower to reach CNY7027/t ($924/t without VAT) and LLDP futures dropped CNY155/t ($24/t) to reach CNY8920/t ($1173/t without VAT).

In domestic spot market, only LLDPE film price list was lifted CNY50/t ($8/t) compared to yesterday, other parcels remain unchanged or even having discounts in the distribution market due to weaker buying interest. A trader from Zhejiang reported, “We are offering CNY200/t ($31/t) discount on our homo-PP cargoes with hope to boost demand, however the number of deals concluded this week is rather disappointed. One of Indian PP supplier have informed that they might not announce any new import offers to China in the next three weeks due to lack of availability. We are now waiting for other international suppliers to open new prices.”  

Another trader in Shanghai added, “We are actually receiving inquiries from customers, however, what buyers are hesitating about is the significant price hike in such a short period of time. Besides, weakening futures trading is also bleaching market confidence in making fresh purchases. We are pretty disappointed with trading activities this week.”  

Most players are expecting a more stable trend in the near term on an overwhelming expectation that strong buyer resistance would slow down the speed of price increases.  

In Southeast Asia PE market, the sentiment remains steady with ethylene costs move higher on the last trading day of the week has reaffirmed players of a firmer trend in the coming days. A Vietnamese buyer expected higher prices for the coming month, said, “Our Middle Eastern PE supplier informed that they would lift April offers by $100/t compared to last month amid limited supply and firming upstream costs. This would make their LLDPE film cargoes to be above $1200/t level. We might be shy away from the market at this type of prices as we are not having enough confidence regarding medium term outlook.” Another trader active in selling to European market added, “Demand in Europe is relatively healthy, just that our Thailand principals refused to give any discount on their cargoes. Instead, more price hike is expected next week. We think this trend might last until next month.”

In the PP market, Vietnamese players experienced a drastic movement with prompt homo-PP parcels being offered at above $1000/t level. A trader received Indian homo-PP offers re-export from China warehouse at $1020/t CIF Vietnam commented, “Our supplier informed that they managed to conclude some deal for South African PPH at $1000/t previously, hence they take more aggressive stance this round. We were surprised with the offers, however, converters with low inventories seems to be more acceptive.” Indonesian players have also concerned about limited offers from international suppliers and a trader said, “Import market is rather quiet and even our regular suppliers are not offering. PP market surges too quickly; hence we do have a feeling about price bubble. Looking ahead, we think market would continue to firm up for the rest of March.”   

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