Asia Daily PP PE Report 15 Mar 2016

In China, the weakening momentum in the futures trading slow down today as contract number 1605 for May delivery posted smaller losses compared to the previous trading session. PP futures on Dalian Commodity Exchange decreased CNY83/t ($13/t) to reach CNY6900/t ($906/t without VAT) while LLDPE futures slashed CNY30/t ($5/t) to settle at CNY8640/t ($1134/t without VAT). 

Domestic homo-PP suppliers continue to cut their spot offers by another CNY100/t ($15/t) from yesterday while other grades remain largely unchanged. A trader in Zhejiang said, “Local demand for PP is not that encouraging despite limited number of offers from international suppliers. We are now more active in export market for a better sentiment as we managed to conclude some coal based PP cargoes to Pakistan at $970/t CIF term.”

Market is now divided in their expectation regarding the outlook in the near term with one group is expecting price correction to take place claiming resistance from buyers would eventually pressure the market, while another is putting more bet on tight supply condition to convince customers to accept higher price levels. A Shanghai based trader added, “Our concern is that if futures prices continue to go down, it might cause futures trading houses to release cargoes which they stocked up previously. We do not expect any significant improvement in demand in the near term unless futures prices escape from it current down trend.”      

In the import market, international suppliers are not very active in giving offers, however player informed about an apparent tightness in HDPE yarn supply stemming from shutdown at regular suppliers like PTT Thailand and Honam Chemical.

In Southeast Asia, couple of major producers announced new prices to regional buyers at higher level claiming tight supply and firming upstream costs as the main support. In fact, a major Thailand maker lifted offers for HDPE cargoes to Indonesia by $20/t compared to last week and by $25-30/t to Vietnam market to reach $1210/t and $1185-1195/t respectively, all based on CIF, LC AS term. Source from the producer said, “We have very limited allocation this round, therefore we are not planning to give any discount on our prices. We think that market might extend the firming trend till next month as maintenance shutdown season would keep ethylene costs at high level.” Meanwhile, Vietnamese players received new offer for LDPE film from a major Southeast Asian maker with $90/t hike to reach $1260/t CIF Vietnam, LC AS term. A buyer commented, “We think this level is little too high and we might need to consider carefully our purchases. Local prices are not catching up with the import offers, and highly volatile energy market is deterring customer buying interest.”

The PP market continues to advance and most international suppliers are not having much allocation, market sources reported. Indonesian buyers received homo-PP offers from a Thai major at $1060/t CIF term, some $40/t higher than last week yet the maker apparently has not fully recovered from a technical woe which hit the plant since beginning of February, resulted in the seller’s inability to supply the market with sufficient cargoes. In Vietnam, a Middle East producer lifted homo-PP prices by $100-110/t compared to previous offers to reach $980-990/t CIF term, however, the market tension built up when only few selective buyers were able to purchase the cargoes in spite of the three-digit hike. A trader said, “Our supplier informed that they only have sufficient quantity for two customers and they sold out quickly without any discount. The short-term outlook is pretty firm but we are not very confident about the medium term.”

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