Asia Daily PP PE Report 19 Apr 2016

In China, futures prices continue to move south as traders are loosing confidence on market outlook ahead of the ChinaPlast exhibition. Contract number 1609 for PP closed at CNY98/t ($15/t) lower than the previous trading session at CNY6781/t ($896/t without VAT). Same contract for LLDPE futures slid CNY110/t ($17/t) to settle at CNY8285/t ($1094/t without VAT).

Domestic producers introduced fresh price list with CNY100-200/t ($15-31/t) reduction for PP and CNY100-200/t ($15-31/t) decrease for PE cargoes. Similar to what have been observed in the market past trading days, traders are selling below producer’s price list with hope to encourage buying interest and many have expressed their disappointment with the number of deal they could conclude.

A converter reported, “Local traders are striving to deplete cargoes ahead of ChinaPlast and Labour days and have pushed domestic homo-PP prices to below the average level in import market. We plan to replenish some small cargoes in the coming days as we think the active maintenance shutdown at some major local plant might hinder prices from revisiting the previous low level.”

Sellers active in the import market have also been disappointed by the state of demand. A trader offer Iranian HDPE film at $1140-1150/t CFR China LC 90 days term and received bid at $1060/t wit the same term. A trader source commented, “Buyers are not interested in making purchases and we are feeling the pressure from falling futures and domestic prices. More plants would resume production in the coming month, hence our buyers are very cautious now.”    

In Southeast Asia, the market is showing a clearer signal of a softer trend, as persistent weak buying interest is pressurising prices. Indeed, a major Thailand producer announced new HDPE prices to Indonesia and Vietnam market with $10/t reduction from last week with a source from the producer commented, “We are having sufficient HDPE cargoes this week yet sales are rather slow and buyers are mostly on the wait and see mood. Sluggish demand in the nearby China market is encouraging sellers to re-export their cargoes to S. Asia at relatively competitive prices. We are not confident about the market outlook, hence we would like to monitor buyer’s respond further before making further decision.”

Meanwhile, another major Middle Eastern producer has also cut their prices for May delivery HDPE film cargoes by $10/t from last month, however elected to implement some $30/t hike on their LLDPE film parcels. A market source commented, “We think it is very difficult for buyers to accept this prices at the current market condition. LLDPE supply is not sufficient yet we expect at least $20/t discount on deals given the availability of re-export cargoes at much competitive shipping term.”

In the PP market, there are very few new prices observed in the market with buyers reportedly show little interest in making fresh purchases at the current high level. Some China coal based PP cargoes are offered at $1025/t CIF Vietnam with a trader managed to conclude some quantity at the reported level said, “We are quite satisfied with the sales as we believed that anything above $1050 threshold would bump into buyer resistance. Demand in local China market is not good now and we are looking for new export outlet in the neighboring markets.”

Regular homo-PP cargoes have not seen much movement after the major Indian maker cut their prices on the first trading day of the week. A Vietnamese trader said, “It is risky to make any purchase now as previous low price cargoes are will arriving. However we concern that domestic market might face an expected tightness by beginning of June as traders are not replenishing now.”

Traders in Indonesia reportedly reduce their offers for homo-PP cargoes, yet their effort appears to yield little result in stimulating buying interest.

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