Asia Daily PP PE Report 21 Apr 2016

In China, futures prices on Dalian Commodity Exchange surged for the first time in a week with contract number 1609 fro PP raised steeply CNY187/t ($29/t) to reach CNY6777/t ($894/t without VAT) while LLDPE contract skyrocketed 360/t ($56/t) to settle at CNY8470/t ($1117/t without VAT).

Domestic producers take a break from continuous falling spot PP and PE offers since beginning of the week by keeping prices unchanged from yesterday’s levels. Firming energy and futures market has stimulated more trading activities, however, it should be noted that most cargoes takers today are domestic traders and there is little changes seen in the import market.

A trader in Xiamen commented, “We managed to conclude more deals for homo-PP and LLDPE film today, mostly to domestic traders. We hope market could sustain the stable trend in the coming days as this might help stimulating trading activities and eventually reducing the local inventories. Our manufacturing customers are holding wait and see attitude since ChinaPlast is around the corner.”

Sellers in the import market are attempting to maintain firm stance on their homo-PP cargoes in spite of stiff buyer resistance. A seller in Chongqing keeps prices for Middle East homo-PP at $1040/t CFR China, LC 90 days term commented, “We received bid at mostly $1000/t or slightly lower. We have not seen any immediate effect of firming futures prices on import market and we are monitoring the sustainability of this trend before making any further decision.”

Meanwhile, traders selling HDPE film cargoes are giving larger than usual discounts with hope to entice sales, pushing import HDPE film prices to below $1100/t threshold this week. A trader in Shanghai said that he is willing to negotiate with serious buyers, however no purchased enquiries received today.     

In Southeast Asia, strengthened energy market has given players more confidence in maintaining their offers, yet trading activities remain quiet ahead of ChinaPlast exhibition. Sellers continue to complain about the challenges in concluding deals, especially for HDPE film amid comfortable supply and lethargic demand. Meanwhile, a major Middle Eastern producer concluded LLDPE film cargoes at $20-30/t discount from the initial offers at $1230/t CIF Vietnam. A buyer informed, “We did not enroll this deal as we were offered re-export cargoes for the same material from China at the similar price level. We decided to go for the re-export offers due to shorter shipping time. Local market is very weak at the moment and wee feel uncertain about the medium term outlook, from which we are not buying deep seas cargoes.”

Meanwhile, other regional and international producers are also preparing to announce new offers with most intended to maintain firm stance on their cargoes. A producer informed, “We are in discussion about the possible new prices for May delivery now and there is no signs about any reduction at the moment. We are especially tight on LLDPE due to some unsolved production issues; yet demand is weaker than last month, hence we might not implement any significant hike.”

Indonesian players are also reporting disappointed demand for PE film grade at the time demand was expected to be strong. Traders have reduced their HDPE and LLDPE film offers slightly compared to the beginning of the week to attract buying interest, but their effort has not yielded any satisfactory result.

In the PP market has not seen much movement in term of prices as market positions itself on a tug of war between tight supply and reluctant buyers. Most sellers are not intended to give any significant reduction in the absence of sales pressure. Buyers on the other hand prefer to adopt wait and see stance. A Vietnamese buyer purchases some Chinese coal based PP at $1010/t CIF Vietnam term said, “Other regular origins are too pricy therefore we decided to test the suitability of coal based PP.”

Vietnamese players reported receiving lower offers for Indian homo-PP toward the end of the trading day at $1060/t CIF term with a source added, “Compared to last week, the latest offer indicated some $50/t reduction compared to last week. Due to such rapid reduction, we are not very timid in making fresh purchases.”

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