Asia Daily PP PE Report 18 May 2016

In China, futures prices on Dalian Commodity Exchange continue to move south in today’s trading session as contract number 1609 for PP slashed another CNY92/ton ($14/ton) from yesterday to settled at CNY6704/ton. September delivery contract for LLDPE also inched down CNY10/ton ($2/ton) to reach CNY8000/ton ($1045/ton without VAT).

Stubborn weakening trend in futures trading has persuaded domestic producers to reduce PP spot offers by CNY50/ton ($8/ton) from yesterday while PE cargoes remain unchanged. The number of deal concluded is rather limited at discount from initial offer level. A trader based in Yuyao commented, “We hope futures market could find some support from strong energy values in the coming days, which might give domestic market a sentiment boost. Till then, we plan to focus on depleting inventories while monitoring further development before making fresh replenishment.”

In another news, auction results for Shenhua's coal-based cargoes concluded at 100% sold out for homo-PP at the price levels of $860-895/ton EXW China, excluding VAT. Kindly visit our website at www.commoplast.com for detailed information on the deals.

Besides, SINOPEC SABIC Tianjin Petrochemical Co Ltd (SSTPC) is scheduled to restart its 300,000 tons/year HDPE line this week after completed maintenance work. The plant was brought off-stream on 11 May.

Import homo-PP to China has not seen any significant movement as sellers gain support from increasing upstream costs. Many players therefore believed that market might sustain the stable trend for the remaining time of May 2016, yet expressed a more conservative expectation for June.

Players in the PE market reported receiving HDPE injection from the newly start up Braskem Idesa plant based in Mexico at as low as $1020/ton CFR China, LC AS term, which arouse market concern over the demand-supply balance in the near term.

In Southeast Asia, market proceeds further into the week with additional price reduction observed on both import PP and PE cargoes. There are number of deals reported on homo-PP cargoes after traders committed to fresh low level. A converter purchased Indian homo-PP at $970/ton CIF Vietnam, LC AS term commented, “We started to replenish some small quantities as we believed that there is little room for PP prices to reduce further in the coming days given firm energy and upstream values. Meanwhile, we remain cautious about the market outlook since fasting month in Muslim countries might limit demand.” With the impact of sliding import offers, Vietnamese players are reporting continuous weakening domestic market in which many traders are holding their purchases with hope to obtain more discount to balance the previous high cost cargoes.

Another regional buyer reported purchased Vietnamese homo-PP injection at $1100/ton CIF Indonesia at the beginning of the week added, “Our supplier is very firm on their prices, however, we think this is much more competitive than domestic offers. We see the overall supply condition has not improved from the previous tightness, hence we are not expecting to see large reduction in the coming days.”

The PE market has plunged up to three-digits in value compared to last month, even for LLDPE film, which is known for supply tightness previously. Players attributed the drop to persistent weak demand as market enters the traditional low season for flexible packaging sector. A buyer received Iranian LLDPE film, re-export from China to Vietnam at $1100/ton CIF, LC AS term, said, “This price indicates some $120/ton reduction compared to last month. We feel so uncomfortable with such speedy falling trend, therefore we prefer to temporary withdraw from the market waiting for signs of stabilize trend before taking position.” With this drastic movement, import HDPE and LLDPE film to Southeast Asia market is now trading below the ethylene costs, which many market participants consider it to be unsustainable.  

Domestic traders within the region are reportedly down adjusting their local prices on a daily basis this week to attract buying attention, yet many have shown disappointment.

For detail Daily Prices in China and Southeast Asia market, kindly visit our website at www.commoplast.com. Please contact our representatives at commoplastinfo@gmail.com for log in assistance.