Asia Daily PP PE Report 13 May 2016

In China, the Dalian Commodity Exchange ended the week at mixed trend after three consecutive winning sessions. Future contract 1609 for PP edged up CNY12/ton ($2/ton) to reach CNY6733/ton ($883/ton without VAT). Same contract for LLDPE meanwhile withdrew CNY50/ton ($8/ton) from previous gains to settle at CNY8075/ton ($1060/ton without VAT).

Weaker futures trading has also limited the extent of price increment in domestic market as local price lists announced at only CNY50/ton ($8/ton) higher than yesterday for both spot PP and PE cargoes. Demand on the other hand is taking a breathe from busy activities earlier this week.

A trader from Xiamen said, “Buyers are retreating to the sideline after a flash purchases in the past two days. We managed to clear some inventories on hand, however we think this could be the only uptick in demand for this month, the remaining of May might be quiet.”

In the import market, some small discounts are observed for homo-PP deals with a trader sold Indian cargoes at $930-935/ton CFR China, LC 90 days term said, “Some of our regular customer decided to replenished a small quantity while others are expressing buy ideas at below $900/ton threshold. More Fareast Asia crackers would resume production by second half of this month, which might pressure propylene costs lower. We prefer to maintain conservative stance in the coming days.”

In Southeast Asia, market sentiment remains quiet and buyers are proceeding with purchases with high caution, bearing in mind the possibility of further price reduction in the near term. Import homo-PP prices to the region continue to sustain the stable to soft trend; however, the number of deal is very limited. A buyer purchased 200 tons of Singaporean homo-PP at $1000/ton CIF Vietnam, LC AS term said, “Earlier this week have also bought 100 tons of Saudi Arabia cargoes at the same price level. We think market might see additional drop in the coming weeks, therefore we only replenish small quantity. Demand for our end product is regular for now.”

A trader sold Chinese regular homo-PP to Indonesia at $1000/ton CIF term added, “We managed to close some deals after agreed to small discount. We plan to move cargoes quicker in the coming days as near term outlook doesn’t appear to be so optimistic to us.” The source added that buyers are very reluctant toward coal-based cargoes which indicates market needs longer time to accept these cargoes  

Buying interest in the regional PE market has not seen much improvement on the last trading day of the week, which forced sellers to commit further reduction to conclude deals. A Thailand producer sold HDPE film at $1150/ton CIF Vietnam LC AS term, some $60/ton lower than the initial offers, reported, “We have sold about 500 tons of material at this level. Demand is weak and many of our regular customers are not responding to the latest prices. We hope to deplete some inventories before more re-export cargoes from China emerge in Southeast Asia.”

Another trader sold Iranian LLDPE film on re-export basis to Vietnam at $1120/ton CIF term said, “We have concluded a good quantity at this price which indicates that buyers are not having many inventories on hand. Mainstream cargoes are still seeing relatively stable trend, yet market is not attracted due to high price level. We plan to reduce stock on hand as near term market prospect is really weak.”

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