Asia Daily PP and PE Overview 29 June 2016

In China, the bullish sentiment observed on Dalian Commodity Exchange over the past nearly three week appears to be loosing some steam. Contract number 1609 for LLDPE fell CNY235/ton ($35/ton) to CNY8905/ton ($1145/ton without VAT). PP futures on the other hand continue to inch up in a smaller extent of CNY25/ton ($4/ton) from the previous trading session to settle at CNY7929/ton ($1019/ton without VAT).

Domestic spot market remains relative strong with fresh price lists indicate some CNY50-200/ton ($8-30/ton) hike for PP and CNY50-100/ton ($8-15/ton) increased for PE. Market reported seeing satisfactory number of deal for homo-PP cargoes, however Shenhua Ningxia Coal Industry Group has started to offer yarn grade to the spot market, spark anticipation of loosening local supply condition in the near term.

A trader based in Ningbo said, “General expectation on PP is brighter than PE as more plants producing this grades shall be affected during the G20 Summit. However, we do hope supply to improve in the near term with more plants switch their production. At the moment, most cargoes are held by traders, which appears to be a little risky.”

In contrast, players reported seeing better supply condition for LLDPE film thanks to the return of some domestic plants. This is attributed as one on the factor dragging LLDPE futures market down. A trader from Linyi said, “Spot offers firmed up but the number of deal we could conclude is rather disappointed. If futures market continue to weaken in days ahead, buyers might loose confidence, resulting in price cut among traders. Hence, we prefer to remain conservative.”

Sentiment in the import PP market remain strong with a trader sold Middle East homo-PP cargoes at $1010/ton bonded warehouse, LC AS term said, “There are still deals at higher prices beside the persistent strong futures market, from which we think the current firming trend might sustain in the coming month.”

In Southeast Asia, sellers continue to adjust prices up in spite of slower trading activities as players in Indonesia and Malaysia enter the holiday mood. Buyers on the other hand are materializing their cautious stance by holding their purchases, especially for homo-PP on the lack of end product demand and uncertain market outlook. A Vietnamese buyer informed, “Our regular Saudi Arabia supplier has not announced new prices but checking on market acceptance levels. Meanwhile, traders sold Indian cargoes at $40/ton lower than initial offers, which indicated the possibility that the firming trend is loosing steam. We prefer to hold wait and see stance for now as we are not confident about the near term outlook.”

In Indonesia, most players are wrapping up their businesses before the Ramadan holidays officially take place next Monday; yet, traders without sales pressure decided to lift their prices with a source said, “We increased our offers by $20/ton compared to earlier this week as we are not having quantity. Our homo-PP yarn might remain tight till August, hence we think market might sustain the firming trend in the near term.”

Regional PE market has not seen many activities as most sellers have already sold out their allocation while buyers continue to look for LLDPE film cargoes. Many players are expressing a more optimistic view over the medium term outlook for PE with a market source said, “We feel the support for firmer PE prices is more solid than others given tight supply, firming upstream costs and expected healthier demand towards the Q3. We are searching to replenish some LLDPE film cargoes, however, there is very limited number of cargoes available.”

In domestic Malaysia, a major local maker announced July delivery cargoes with MYR50/ton ($12/ton) reduction for HDPE film and MYR100/ton ($25/ton) lower for LLDPE film. Buyers are expressing their disappoint as they were initially expecting larger discount. A trader said, “Demand in local market is rather slow throughout the fasting month while we are still having some stock on hand to meet immediate need from converters. We thought there would be larger reduction; however, we would monitor market respond first before taking position.”

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