Asia Daily PP PE Report 11 May 2016

In China, futures prices on Dalian Commodity Exchange ended today’s trading session with increases though the gains are rather limited. Contract number 1609 for PP edged up CNY172/ton ($26/ton) at CNY6754/ton ($887/ton without VAT) while LLDPE futures gain CNY80/ton ($12/ton) to settle at CNY8205/ton ($1077/ton without VAT).

Domestic spot offers for both PP and PE has started to gain support from the firming futures trading with price list from local producers showed some CNY50-100/ton ($8-16/ton) hike from yesterday. Many traders are very positive over the state of demand these two days, yet the sustainability is seen as fragile.

A trader in Beijing commented, “We managed to conclude a good number of deal these two days, however most buyers are very cautious in their purchases, taking only minimal quantity needed.” Another converter from Fujian added, “The futures market is highly volatile recently, therefore we prefer to utilise our remaining inventories instead on making fresh replenishment. Demand is very limited, which might also restrict any large extent of price increment in the near term. We think market would remain on the soft note till end of the month.”

The import market in fact has found another support from firming futures and domestic prices to sustain its stability trend. Offers for dutiable homo-PP are not seeing any abrupt movement in spite of softer prices observed in the near by Southeast Asia market. A distributor reported, “We are still looking for opportunities to export coal based cargoes to other regional markets. We are not very confident about the sustainability of the current firming trend amid absence of real demand.”

In Southeast Asia, market sentiment has not seen any noticeable changes today, however buyers seems attracted to the lower prices given by some sellers. Indeed, a major Middle East producer announced fresh homo-PP offers to Vietnam $30/t lower than late last month at $1000/ton CIF Vietnam, LC AS term. Several deals were reported at the new price level with a buyer said, “We have confirmed purchasing 100 tons and now waiting for the supplier’s feedback on our request for additional 50 tons. We were initially expecting to see offers at this level only at the end of the month, however, sluggish demand might have pushed sellers to take more aggressive move.” Vietnamese players are also reporting same price level for several other origins, including non-dutiable cargoes.

In Indonesia meanwhile, deal for Indian homo-PP was reported at $20/t lower than the initial offer at $1030/t CIF, LC AS term. A buyer commented, “Local traders are offering discounts on deals to cope with persistence sluggish demand condition, yet they are not having many cargoes on hand.  We are a bit concern with the near term outlook, therefore we only buy a small quantity.”

In the PE market, players are describing the condition as strangely quiet with an international trader commented, “Market behaves in such a irregular way that buyers are just simply wait-and-see. Even our long-term customers are very cautious now.” A major Thailand producer down adjusted their HDPE offers to Vietnam early this week by $10/ton and now willing to slash another $15/ton for serious buyers. A source from the producer said, “We haven’t managed to close any deal by now. Buying interest is very weak and we are not confident about the near term outlook.”

In the Plant Status news, Japan’s Mitsubishi Chemical has shut its 540,000 tons/year naphtha cracker on Monday, 9 May 2016 for 50 days scheduled maintenance work. This is the second cracker in the country that has been taken off-stream this week together with Maruzen Petrochemical, which CommoPlast reported earlier.     

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