Asia Daily PP PE Report 26 Apr 2016

In China, futures prices on Dalian Commodity Exchange extended another firming day with contract number 1609 for PP settled at CNY179/t ($24/t) higher than yesterday to reach CNY7069/t ($930/t without VAT). September delivery for LLDPE contract also increased CNY110/t ($14/t) to settle at CNY8815/t ($1159/t without VAT).

Thanks to the surprising firming futures trade, spot offers for both PP and PE in domestic market continue to advance today with domestic traders become more active in replenishing their stock. PP cargoes added another CNY100-200/t ($15-31/t) while PE offers increased by CNY50-150/t ($8-23/t).

A trader in Beijing commented, “Most cargoes takers today are still traders since converters are mostly away from the market. We are not expecting this current trend to be sustainable, yet we are happy to deplete some cargoes on hand. Looking forward, we think PP market would endure greater pressure than PE due to larger number of new plants coming online.”

In the plant status news, Inner Mongolia ChinaCoal Mengda New Energy & Chemical Industry Co Ltd (Zhongmei Mengda Chemical) has offered the first cargoes from its newly start-up coal based PP plant today after achieved on-spec olefins output mid of the month. The plant consists of 1.8 million ton/year of methanol and 600,000 ton/year of olefins units, as well as a PP and PE unit each has annual capacity of 300,000 tons/year.

In the import market, homo-PP offers see little changes while a major Thailand producer adjusted down PE prices by $10-20/t to China compared to earlier this month. A buyer received the new offer reported; “This offer might not attract so much of buying attention since most buyers are now away from the market for ChinaPlast exhibition. We see very limited trading activities these two days and this might prolong throughout this week."      

In Southeast Asia, sentiment remained quiet with limited number of deals with discount. There is a rather mixed trend observed in the PP market as several sellers elected to drop their initial firm stances to close deals at larger discount than usual while others are keeping up with the increasing upstream cost. A regional buyer purchased Vietnamese homo-PP at $1100/t CIF Indonesia, LC AS term, some $30/t lower than initial offer said, “We decided to replenish some cargoes since we only have sufficient material till end of May. This price seems competitive now after some good discounts, however, we are feeling uncertain about the near term outlook. Demand for our end product is regular at the moment.” Persistent sluggish demand has also forced domestic traders in Indonesia to reduce their offers by $10-20/t compared to last week despite tight supply.

In Vietnam, Saudi Arabia homo-PP were also concluded at $20/t lower than initial offers at $1030/t CIF Vietnam, LC AS term. A buyer purchased 50 tons cargoes at the reported price commented, “Our supplier has finally dropped their firm stances and this doesn’t appears to be a positive indicator for the market. We only proceed with small buy and would only go for larger purchases after the Labour Day holidays when market direction becomes clearer. Demand in domestic market is slow and most traders are selling below current import offer now. This has casted tremendous pressure on import market recently.”

The PE market see little movement and sellers continue to complain about difficulties in concluding deal. A major Thailand producer maintained their HDPE offers stable compare to last week at $1240/t CIF Vietnam for film, injection, yarn and blow modling grades. Source from the producer commented, “We maintained our offers unchanged and so far we have not managed to conclude any deal. Demand for HDPE blow molding is slightly better than other grades yet sales are unsatisfactory. Many of our regular customers are attending ChinaPlast; therefore we are prepared for another sluggish week until beginning of May. We have comfortable supply for now.”

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