Asia Daily PP PE Report 28 Jan 2016

In China, futures prices on Dalian Commodity Exchange follow a divergent trend today with PP futures increased CNY34/t ($5/t) to settle at CNY6179/t ($803/t without VAT). Meanwhile, LLDPE futures drop CNY15/t to close at CNY8425/t ($1095/t without VAT).

Physical spot offers for both PP and PE in local market posted another CNY50/t gain while demand in certain area remains satisfactory, according to market players.  A trader in Ningbo said, “The pre-Chinese New Year replenishment behavior this year has altered significantly compared to previous cycle. Local inventory for both PP and PE drops quite a bit this week due to traders taking in cargoes, however, the overall market confidence is not that firm.”

In the import market, couple of major Southeast Asian producers reportedly sold out their PE cargoes today after agreed to some discounts. A trader from Xiamen said, “Falling ethylene costs have yet to affect the PE prices as overseas suppliers are having limited supply. We have purchased Malaysian HDPE film at $1060/t and LDPE film at $1120/t CFR China, LC AS term and we will be off from the market this weekend for Chinese New Year.” Import PP prices remain very firm however the buyers are not active in making purchases. Market is expecting a significant drop in trading activities for the remaining time before Chinese New Year. Optimists are highly confident in seeing an uptick in demand after the holidays while other are more conservative citing volatile upstream markets and uncertain macro economic performance. 

In Southeast Asia, the PE market remain mostly stable despite ethylene cost has plunged $150/t compared to the beginning of the month. There is very limited number of offer observed today with prices mostly follow stable trend. A Vietnamese buyer received Middle East HDPE film at $1100/t and LLDPE film at $1140/t FCA Vietnam said, “We are not having much stock now but we could not afford the risk to purchase these cargoes. Local PE prices are still on the downward trend, in which we prefer to temporary suspending our purchasing activities to wait for some positive indicator.”

The PP markets follow mostly stable to firm trend with international sellers reportedly attempting small hike on their offers in the absence of sales pressure. A buyer in Indonesia said, “Our Philippines and Saudi Arabia suppliers have stopped offering today and they claimed to have sold out available allocation already.” Another buyer in Vietnam added, “We are trying to bid $10/t lower for Philippines homo-PP, but our supplier refused to accept. We prefer to maintain cautious stance as local PP prices are still weak at the moment.”  

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