Asia Daily PP PE Report 05 Apr 2016

In China, futures market resumes trading activities after a brief holiday with weaker sentiment due to falling energy values. Contract number 1609 for PP on Dalian Commodity Exchange loses CNY27/t ($4/t) to settle at CNY6980/t ($922/t without VAT) while LLDPE contract decreased CNY85/t ($13/t) to reach CNY8570/t ($1132/t without VAT).

Domestic spot offers for both PP and PE remain largely stable compared to last week as seller claimed limited supply, yet it does not stimulate the already waning demand. A trader in Beijing commented, “Local inventory has increased slightly after the holiday, however, it is not sufficient to create any downward pressure on the market. We received very few purchase enquiries today and we might need to monitor the market further before making any decision.”

In the import market, sellers are attempting to push homo-PP prices up to $1050-1060/t CFR China, LC 90 days term and bump into buyer resistance. A buyer in Guangdong received one of those offers said, “We think this price is too high compared to the relatively stable propylene monomer costs. We are not expecting the current firming trend to last till May, as this is the traditional low season for PP application, therefore we are refraining from making large purchases now.”         

Meanwhile, traders are carving deeper path into re-exporting their PE cargoes to other regions with aim of maximizing profit margins amidst weakening local demand. A trader in Shanghai informed, “We are having cargoes on hand and ready to re-export if there is any enquiries. Local demand is not satisfied since buyers are loosing confidence regarding medium term outlook.”

In Southeast Asia, market has not seen much changes as the firming sentiment persists on the support of supply tightness. Couple of regional suppliers has decided to lift their offers or expressing intention to implement further hike on their cargoes. Homo-PP prices see fresh hike from a major Thailand maker to reach $1200/t CIF Indonesia, LC AS term, some $50/t higher than last week. Players are not showing great interest in the new offer with a source commented, “Prices continue to firm up as seller claimed limited supply, however we see significant slow down in demand this week. Most of our customers informed that they have sufficient material and not planning large purchases in the near term.”

Meanwhile, players in Vietnam received stable homo-PP offers from a major Middle East supplier, yet buyers are showing strong resistance level considering the current state of the energy market. A buyer was offered M. East homo-PP at $1110/t CIF Vietnam said, “Local demand is not there anymore and some domestic traders are cutting their offers to attract buying interest. Out international supplier informed that they are willing to closed deal at last week’s level, which is $40/t below the initial prices. We are considering right now.”

The regional PE market also witnesses some slight upward movement and Thailand HDPE cargoes have reached the $1300/t threshold in Indonesia. The producer is also talking about a possible price increment to Vietnam market with initial expectation of $15/t higher than last week at $1250/t, yet there is no official prices by the time this report is published. Source from the producer informed, “We are not having much cargoes as our PE plant is operating at reduced rate. Demand in Vietnam is not as strong while weaker energy values and availability of re-export cargoes are putting some pressure on the market. We might announce new prices in the next couple of day.” Most regional players are not expecting any price reduction in the near term considering the current firm upstream costs and limited supply condition. PE supply might be tightened further as integrated producers are seeing better profit margins from selling ethylene monomers to North East Asia region.      

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