Asia Daily PP PE Report 25 Mar 2016

In China, future prices on Dalian Commodity Exchange continue to follow a diverged trend today with contract 1605 for PP surged CNY171/t ($26/t) to reach CNY7374/t ($968/t without VAT). LLDPE contract for May delivery meanwhile ripped CNY185/t ($28/t) from yesterday trading session to CNY9360/t ($1229/t without VAT).

Local sellers has shrugged off all the uncertainties seen in the futures trading to lift spot PP and PE offers by CNY50-100/t ($8-15/t) today, however, buyers are showing an increasing degree of resistance towards the higher range of the overall offer. A seller commented, “Our sales for PP is satisfactory this week as continuous firming trend has encouraged buyers to replenish some small quantity. However, PE market is not as strong as expected and only LLDPE film appears to be in demand. However, we are not confident about the medium term outlook given the end of the agriculture season would be around mid of Apr.”

The import homo-PP market sees minimal offers today with some sellers tried to examine buyer acceptance at $1040/t for Saudi Arabia origin, based on CFR China LC 90 days term. A trader in Ningbo reported, “Our customers did not positively respond to this new level, hence we withdraw the offer shortly after that. Many other sellers elected to stay on the sideline with hope to see firmer market in the coming week. Demand somehow is not pickup at the same pace as prices, and this is not something we would ignore when planning new inventory in the near term.”

A Singaporean maker reportedly sold out PE allocation to China this week at $1210/t for LLDPE film and $1390-1400/t for mPE, all on CFR China, LC AS term. The number of LLDPE film cargoes the producer could supply this time is rather limited and it is sold mostly based on bundle basis, players reported. “Converters are not very eager to make fresh purchases at the moment, yet we do not see any possibility of price reduction in the near term given inadequate cargoes from international sellers. We expect the current firming trend to continue in the near term.”

In Southeast Asia, while couple of major market are having holidays; Vietnam PP market continues to escalate with a major Saudi Arabia maker settled homo-PP cargoes at $50/t higher than last week to reach $1060-1070/t CIF Vietnam, LC AS term. “We have not purchased any cargoes since import offers reached $1020/t level; however, we now place bets on bullish outlook as several regional plants are not having export allocation. We are just a little concern about the ChinaPlast milestone as market normally turn south during this period.” Meanwhile, traders in local Indonesia market have lifted homo-PP offers by $20/t above producer’s official price list on the back of limited supply and healthy demand. Players are expecting further upward adjustment in prices in the coming week.

The PE market started to finalize deals for offers opened during the week, however, many buyers are very reluctant in making purchases. A converter in Malaysia received offers for UAE LLDPE film and HDPE film at $1230/t and $1180/t respectively said, “We think the LLDPE prices are a little too high. We prefer to wait for more international offers before making decision. We are still having some inventory on hand now, therefore we are not having pressure to restock immediately.” A buyer in Vietnam added, “Our supplier refused to accept our bid, therefore we might only take one container of LLDPE film at $1220/t CIF term. We are not confident about the market outlook in the medium term, while nearby ready cargoes are now offered at $1280/t level.”

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