Asia Daily PP PE Report 07 Apr 2016

In China, futures prices on Dalian Commodity Exchange posted loses for the third straight trading session, erased most of the gain last Friday. Contract number 1609 for PP subtracted another CNY93/t ($14/t) to settle at CNY6891/t ($910/t without VAT) while LLDPE futures fell CNY150/t ($23/t) to reach CNY8400/t ($1110/t without VAT).

Spot PP and PE offers in local market have not been able to hold up in the face of weakening futures trading, and stepped back CNY50-100/t ($8-15/t) from yesterday’s levels. Players are showing disappointment toward the current state of demand. A trader commented, “Local sellers are adjusting their offers in accord to the demand, yet we see very little interest from the buyer’s side. We believed that local market would not experience any significant swing in the near term given a series of plant shutdown this month. However, competitive domestic prices might pressure the import market.”

In the import market, homo-PP sellers are reportedly reducing prices on their cargoes after several weeks of maintaining firm stance. A trader in Guangzhou sold Brazilian homo-PP at $1010/t CFR China, LC 90 days term, some $30-40/t lower than initial offer said, “We have maintained this offer level for over two weeks and couldn’t attract any buying interest. We thought the market could have already peaked out. We are a bit concern about the presence of several irregular origins in PP auctions these days, hence we are not very confident about the near term outlook.” Other sellers on the other hand retain a very firm stance on their cargoes.

In Southeast Asia, the firming sentiment started to show some signs of slow down amid weakening buying interest despite some offers emerged at higher levels. In the PE market, a major Thailand maker announced new HDPE prices to Vietnam at $10-15/t higher than last week to reach $1250/t for HDPE blow molding and HDPE yarn, all based on CIF Vietnam, LC AS term. Source from the producer said, “We are not having any HDPE film cargoes this week and our customers are complaining about the new offers. Currently, there are many re-export cargoes available in the market at competitive price, therefore we might need to offer some discounts to conclude deal.”

Indeed, there is a large quantity of HDPE film from various origins are being offered in Vietnam at the range of $1180-1250/t based on re-export from China basis this week. However, there is very limited buying interest as buyers claimed weakening domestic prices and concern about the demand appetite in the near by China market. Today, couple of Middle East LLDPE film cargoes are offered based on the same basis to Vietnam at $1290-1305/t CIF term. A trader commented, “We could not achieve this level by re-selling in local market at the moment. We have purchased some LLDPE film cargoes at $1260/t and we might suspend our purchases here. May outlook is too cloudy and we are not confident to place any bullish bet.”

In the PP market, firming moment appears to loose steam as buyers across the region reported concluding deals at larger discount compared to last week. One of the hottest markets in the region over the past months – India, is reporting weaker sentiment dragging down by lack of buying interest. Despite not seeing any obvious flip in market trend, buyers witness a more willingness to give discount from suppliers. A trader commented, “We received offer for Iranian homo-PP at as high as $1070/t CIF India last week; however, there is already $40/t discount for this week deal and our suppliers are willing to adjust more if we are ready to pay 30% TT in advance. Buyers are now on the side-line waiting to see clearer trend.”

Buyers in Vietnam received offers for Middle East homo-PP at $1110/t based on CIF, LC AS term earlier this week and managed to conclude deal at $50/t discount from initial offer. A buyer commented, “We have purchased some cargoes last week and we prefer to wait a while before making another replenishment. We hope this is not a serious sign of a market direction overturn since supply is still pretty tight and demand in European market remains healthy. Yet we are not expecting any further price increment in the near term with the current weakening local market.” There are several PP plants in Far East region undertaking scheduled turnaround, which is expected to grind out support to the market. However, buyers appear to have insufficient confidence in the outlook coming months.

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