Asia Daily PP PE Report 27 Jan 2016

In China, futures prices on Dalian Commodity Exchange extend the firming trend today with PP futures settle at CNY170/t ($25/t) higher to reach CNY6142/t ($800/t without VAT). LLDPE futures increase CNY195/t ($30/t) to end the trading day at CNY8430/t ($1095/t without VAT).

Local spot PP and PE offers are also gaining the support from continuous firming futures trades this week. In fact, domestic sellers lifted their PP and LLDPE prices by CNY100/t ($15/t) again today while limiting the selling quantity ahead of the Chinese New Year. A trader from Linxi commented, “We expect to see further upturn in the futures market in the coming days, however, we do not think the impact on the spot market will be significant as most of the transportation companies are going off for holidays this weekend, hindering the delivery of the material. In addition, the upstream markets are not so cooperative with the downstream’s firming trend. The sustainability of the current trend is really questionable to us, especially when local supply would build up after the long holidays.”

In the import market, import PP to China firmed up by $10-20/t compared to the beginning of the week and traders are on the frontier to replenish inventory this round, players reported. A seller based in Ningbo said, “Converters have actually restocked in the past one to two weeks, this time we sold mostly to local traders. At the moment we are waiting for Indian major to announce their new offers, however, we already managed to sell our South Africa homo-PP parcels at $835/t CFR China LC 60 days term. This could be the final week we can conclude deal, next week there might minimal trading activities.”

Import PE prices at the upper range reportedly close deal at discount due to strong resistance from buyers. A Shanghai trader informed, “We managed to sell a good quantity of Thai HDPE film today after agreed to some $20/t discount from initial offers. We expect to see more trading activities in March, after buyers fully return from the long Chinese New Year holidays.” 

In Southeast Asia, the PE market remains mostly stable with no other supplier open new offers today. However, offers at the upper range of the overall market prices are facing stiff resistance from buyers and most deals are concluded with discounts. In fact, Vietnamese buyers reported to have purchased Thai HDPE at $1085/t after obtained $20/t discount from initial offers while buyers in Indonesia are expecting a similar range price reduction. A buyer said, “We receive offers for Philippines HDPE film at $1100/t CIF Indonesia term but we think that there will be some reductions if we are serious about buying. Demand in Indonesia is not so strong and falling monomers costs might dampen the sentiment further.”

In the upstream market, naphtha cost based on CFR Japan has broke below the $300/t threshold on abundant supply and pulling ethylene prices in Asia down by another $25/t, totalling the lost value of $140/t compared to beginning of the month.

The PP market maintains the stable to firm stance compared to last week with a major Indian maker announced new price at $15/t higher than the last offer to reach $860/t CIF Vietnam term. Meanwhile, few other suppliers claimed that they have sold out the available quantity in hand. A Southeast Asian producer commented, “PP prices in the near-by China market are still firming up despite the Chinese New Year is around the corner. We have already depleted our inventory, hence not offering at the moment. There is some technical issues at our plants, but nothing is so serious.”

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