Asia Daily PP PE Report 29 Jan 2016

In China, futures prices on Dalian Commodity Exchange posted some minor drop today with PP futures decreased CNY65/t ($10/t) to reach CNY6108/t ($790/t without VAT). Meanwhile, LLDPE futures soften CNY15/t to close at CNY8365/t ($1090/t without VAT).  

Physical spot offers for both PP and PE in domestic market continue to advance CNY50-100/t ($8-15/t) compare to the previous trading day, which players attributed to the absence of inventories pressure of local makers. There are still purchasing activities observed today in both local and import market in spite of firmer prices.

A seller active in PP trading in Shanghai commented, “There is technically no more offer for import homo-PP below $820/t level now and most of overseas suppliers are holding very firm stance on their prices, claiming not having allocation. The market sentiment has been gaining tremendous support from continuous increasing futures values in the past two weeks. However, we think that it is very important to monitor the state of demand after Chinese New Year before making any major decision.”

Import PE prices has also soared $10-20/t compared to yesterday and it is interesting to see a good number of deal concluded at the time that traditionally slow. In fact, CommoPlast has reported earlier today about purchases of Iranian HDPE film and LDPE film cargoes at BWH China at $10-20/t higher while major Southeast Asian producer has also lifted their HDPE film price by $20/t. China market will officially off for Chinese New Year starting 7 February 2016, however, many converters reportedly close off as early as last week to save salary due to lack of end product demand. Players are speculating on a revival in buying interest after the long holidays, yet many are placing bet on a opposite direction citing a possible build up in local inventory and uncertain economy outlook to be the main down-play factors.

In Southeast Asia market, Vietnamese players reported that a major Indian PP maker has withdrawn their offers today after bracing for a $15/t hike in their prices early this week to set at $860/t CIF term. Other suppliers either have sold out or refused any discounts even on serious deals. At the other side of the market, many converters contacted by CommoPlast claimed to have sufficient supply at least until early March 2016. One of the source commented, “We received offer for Middle East homo-PP at $840/t but we are not interested to enter negotiation at the moment. We see the energy market posted some gain recently but we do not expect this trend to be long lasting. The fact that propylene costs remain pretty firm in the past weeks has much supported PP market, however, we prefer to monitor further market development after the long Chinese New Year holidays before making decision.” In the upstream news, Saudi Aramco has settled its propane contract for February with $60/t lower than Jan. This has strengthened the economical sense for propane dehydrogenation (PDH) plants to resume their productions after four straight months marathon in the red margins line.

The PE market is much calmer with no new offers appear in the market today. However, players in Malaysia received local prices for Feb shipment with $35/t reduction for HDPE and LDPE grades and $115/t drop for LLDPE film. A buyer said, “We did not expect such a large drop in LLDPE film price as supply in the import market is rather tight. In addition, we are only carrying sufficient stock for our production till end of Feb; however, demand for our end product is too weak in which we might need serious consideration if we want to make fresh purchase.”                  

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