Asia Daily PP PE Report 28 Mar 2016

In China, futures prices see minor changes on the first trading session of the week with contract number 1605 for PP dropped CNY19/t ($3/t) and LLDPE futures edged up CNY15/t ($2/t). Both contract settled at CNY7365/t ($967/t without VAT) and CNY9380/t ($1232/t without VAT) respectively.     

Local producer elected to lift spot PP and PE offers by CNY100-150/t ($15-23/t) compared to last week, yet distributors are not satisfied with trading activities as buyers showed strong resistance towards the new levels. Demand for HDPE blow moulding meanwhile is healthy is supported by tightness in supply, players attributed.  

A trader commented, “Local prices firmed up today and we tried to limit the selling allocation; however we couldn’t close many deals as buyers seems not in the mood to make fresh purchases. Healthy demand for LLDPE film in Northern China has elevated the whole market, other than that we are not much optimistic.”

Import PP and PE market has not seen any abrupt moment with most sellers are maintaining their offers unchanged. A trader sold Iranian HDPE film at $1140/t, LC 90 days at BWH term said, “Supply in bonded warehouse is rather comfortable and we think PE prices might not be able to go up too much in the near term without the support from downstream demand.”       

In Southeast Asia, market sentiment remains very firm on the first trading day of the week; however, purchasing activities has started to show some signs of slowing down. Buyers in the region appear to be hesitating towards high price level with some expressed their diminishing level of confidence in the market outlook in the medium term. A Vietnamese buyer reported to have purchased Middle Eastern LLDPE film cargoes at $1220/t CIF term said, “Normally we would only be able to get one container of material due to lack of cargoes; it comes to a surprise that this month our supplier managed to allocate extra quantity to us despite supply is not so comfortable.” A trader in Indonesia added, “PE market firms up too quickly in the past month and we think prices might have reached the peak of this cycle. We are not expecting any downturn in the near term; however, any further increases would bump into market resistance. We prefer to remain cautious in the coming days.” Buying interest among regional buyers is rather lethargic with a HDPE bags converter reported, “We are currently reducing operation rate due to lack of end production orders. We have sufficient inventories until May, in which we think the market should be softer; therefore we are not planning to make any additional purchases.”

The PP market is on the other hand continues to escalate with the support from limited supply stemming from a series of plant issues in the region. A major Thailand maker lifted homo-PP offers by $40/t compared to last week to reach $1150/t for raffia and injection grades, CIF Indonesia, LC AS term. However, market is complaining about the non-available homo-PP raffia cargoes from the supplier. Meanwhile, disappointed local demand in the near-by China market has encouraged some sellers to explore Southeast Asia potential. A trader offers China homo-PP cargoes at $1065/t CIF Vietnam said, “Weaker futures market is dampening local buying interest. We have just opened the new offers and yet to receive respond from the buyer side.” Regional supply might only see relief towards June considering the number of plant issues within the region; however, many players are not shy from taking extra caution when it comes to making purchases of deep-seas cargoes as they are bearing in mind the ChinaPlast milestone.

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