Asia Daily PP PE Report 14 Mar 2016

In China, futures prices on Dalian Commodity Exchange continue to loose steam in today trading session with PP futures decreased CNY149/t ($23/t) to reach CNY6953/t ($916/t without VAT). LLDPE futures have also gone down CNY200/t ($31/t) to settle at CNY8815/t ($1161/t without VAT) on weaker buying interest.    

Despite monomers costs climbed higher late last week, spot offers for both PP and PE in local market remained unchanged, and buyers even can obtain discounts in distribution market as domestic sellers strike to stimulate sales. A trader in Xiamen said, “Weakening futures trading has casted a heavier impact on market sentiment than the firming upstream costs. Buying interest is not there and we hardly can conclude any deal today. We think prices firmed up too quickly and buyers are not ready to accept the new levels. We do expect some price corrections to take place as firming trend cannot sustain without the support from demand.”

Sellers meanwhile are not very active in the import market with very limited number of offers observed today. A trader lifted offers for Iranian HDPE film by $30-40/t to $1160-1170/t CFR China, LC 90 days term said, “We decided to adjust our offers up following the hike in upstream market, yet our customers are not very excited about the new prices. Supply for HDPE film is relatively more comfortable than other grades and most suppliers are gauging the

 market to open new offers. Our Iranian suppliers is going off for the long holidays from 18-26 March, and this might affect the shipment from this market.”

In Southeast Asia, most international suppliers have yet to announce new prices on the first trading day of the week after monomers costs rally late last week. The PE market sees little movement, however most players are expecting higher offers in the near term. A PE bag converter in Malaysia commented, “Ethylene costs have increased more than $100/t since beginning of March, hence we think producers would continue to lift their offers in the near term. We have purchased sufficient stocks for two months; therefore even demand for our end products is regular, we are not in rush to make additional purchases.”

The import PP market is rather quiet with international suppliers are surveying buyers respond before determining the new offer level. A Vietnamese customers informed, “Our Indian supplier would only announce new prices by end of the month and it seems their allocation is not so comfortable. Most of plants shutdown recently might only resume in May, hence we do not think the overall supply condition could improve in the near term. We are monitoring the demand condition in the nearby China market, as we see futures trade continue to go down.” Meanwhile, local offers in Indonesia and Vietnam have also been lifted in line with the international trend. A trader in Vietnam increased their homo-PP offer by VND800,000-1,000,000/t ($35-45/t) to reach VND25,800,000/t ($1050/t without VAT) FD Vietnam, cash term. The source said, “So far our customers are not willing to accept the new price level, however, traders are maintaining very firm stance on their cargoes claiming lack of sales pressure. We think that the market might not be able to accept such big hike immediately. We would like to monitor further development before making any decision.”

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