Asia Daily PP PE Report 22 Apr 2016

In China, futures prices on Dalian Commodity Exchange slow down significantly after skyrocketing in the previous trading session. Contract number 1609 for PP grinds out CNY25/t ($4/t) gain compared to yesterday to settled at CNY6800/t ($897/t without VAT) and the same contract for LLDPE closed at CNY8495/t ($1120/t without VAT), a minor gain of CNY5/t ($1/t).

Spot offers for both PP and PE in domestic market have not changed even with firmer futures values. Trading activities remained stable and local traders are attempting to deplete cargoes before sentiment mute during ChinaPlast week.  

A trader in Shanghai commented on the prospect of the near term market outlook saying, “We are now concerned about three main issues, first is the accumulation of local inventories after ChinaPlast and Labour Day week, second is that the market shall enter the seasonal low demand from packaging sector and third, most domestic plants shutdown this month would come back in May, which mean supply would turn comfortable. We remain sceptical about any possible price hike within the short term focus.”

In the import market, traders active in trading PP have shown frustration towards the persistent sluggish demand condition with some willing to cut offers to sell at negative margins. A trader in Ningbo reported offering Indian homo-PP at $980/t CFR China, LC 90 days term, some $20-30/t lower than the producer’s official price given earlier this week. Source from the trader said, “We are rather disappointed on how import market respond to the firmer futures prices these two days. We managed to clear out our inventory and at the moment we would like to monitor the market further before making any decision.”

Import HDPE film appears to be under pressure as well and several deals were reported at larger than usual discount.  

In Southeast Asia, sentiment is getting quiet and there are clearer signs of a softening trend spotted in Vietnam market. Indeed, buyers here received offers for Saudi homo-PP with $20/t reduction compared to yesterday from the same supplier to reach $1050/t CIF Vietnam, LC AS term. Meanwhile, Chinese regular homo-PP also sees some $20-40/t reduction from the beginning of the week at $1020-1040/t CIF Vietnam, LC AS term with a market source informed, “Other Fareast Asia suppliers are still maintaining very firm stance on their prices. We think market might see further reduction in the coming week since there are minimal trading activities during ChinaPlast week. We already have sufficient inventory till mid June and we are not in rush to buy any additional quantity for now.”

In India, it is reported that a major producer has adjusted domestic PP offers down by IND2000/t ($27/t) compared to beginning of the month on the face of fading demand. Sources added that the current severe drought in the country has caused diminishing demand from the converter side and this might prolong throughout May.  

Buyers in the PE market are proceeding with their purchases for May delivery shipment after major Middle Eastern producer opened new prices recently. Players are generally reporting firmer LLDPE film prices while HDPE film offers mostly remained stable or some even come with discounts. A Malaysian buyers received LLDPE film offer from a major Saudi Arabia producer art $1270/t CIF, LC AS term said, “We think this offer is a little too high compared to the market level, however, local supply is really tight due to domestic production issues, hence we might discuss with our supplier to obtain some discounts before concluding deal.”

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