Asia Daily PP PE Report 22 Jan 2016

In China, futures prices on Dalian Commodity Exchange continue to firm up today, marking the fifth consecutive day of advancing regardless of tumbling global energy market. Contract number 1605 settled at CNY35/t higher to reach CNY5992/t ($780/t without VAT) for PP while LLDPE has a humble gain of CNY10/t to close at CNY8250/t ($1170/t without VAT).

Spot offers for both PP and PE in local market remain unchanged due to the fact that domestic makers are free from inventory pressure after depleting a good quantity in the past few days. A trader in Linxi said, “Buying interest appears to be weaker now and we are expecting a more bearish outlook in the coming week. Local inventory is not very high and we think it might take few more days to see the impact of rebound crude oil on the market.”

Trading activities in other areas are reported to be no better and players blamed the “travel home” season as the main culprit. Indeed, factories started to close off to allow workers return home for Chinese New Year with one trader in Beijing commented, “We do not see much movement today and we expect a more stagnant sentiment in the near term as buyers have already replenished sufficient material this week. We think the market will face a great level of uncertainty this quarter due to volatile energy market and weak economy performance.”  

In Southeast Asia, PE buyers in Vietnam is cautiously proceeding with purchases after major international makers announced final discount on their prices. A trader purchased 100 tons of Saudi HDPE film and LLDPE film at $1050-1060/t CIF Vietnam said, “We are not confident to make larger purchases as post-holiday outlook remain cloudy. We prefer to remain cautious to minimize price risks.” Meanwhile, another major Saudi maker is actively collecting bid from buyers before conclude their prices. Most buyers are expecting price level at $1040/t from the producer for both HDPE film and LLDPE film.

An international trader active in Western market stated, “We are currently on the sideline expecting our Thai supplier to step back on their offers to European market. We notice a very firm rebound in the energy prices today but we see the PE market is still under pressure due to weak monomer costs.”

The PP market is following a steady trend with some discounts reported on deals. A Malaysian converter purchased 270 tons of Thai homo-PP at $860/t CIF Malaysia, LC AS term commented, “We replenished some cargoes after obtain a good discount from our supplier. We will continue to monitor the market before making additional purchases.” Meanwhile, buyers in Indonesia appear to have lower appetite for replenishing stock with one stated, “We are still having sufficient inventory for production, hence not in rush to make fresh purchase. We think that there is very few factors could support higher price in the near term amid subtle demand condition.”

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