Asia Daily PP PE Report 23 Feb 2016

In China, futures prices on Dalian Commodity Exchange started to show some signs of slowdown from a continuous firming in the past few trading days. Contract number 1605 for PP closed at CNY5/t ($0.8/t) higher to reach CNY6380/t ($835/t without VAT) and LLDPE futures turned south, posted a reduction of CNY50/t ($8/t) to CNY8775/t ($1149/t without VAT).

Physical spot offers for both PP and PE in local market remain largely stable and only LLDPE cargoes gain CNY100/t ($16/t) compared to yesterday with demand for this grade from Northern China is reportedly healthy. A trader from Zhejiang commented, “We managed to conclude some deals for Middle East LLDPE film at $1120/t CFR China, TT basis today, however the quantity is rather small. We expect the firm sentiment to persist in the near term in spite of uncertain demand outlook.” Players reported that supply for HDPE film is more comfortable than other grades, which resulted in a humbler gain in term of prices.

In the PP market, traders sold Saudi Arabia homo-PP at $850/t CFR China, LC 90 days term while there is a limited number of cargoes from overseas suppliers available, according to players. A Shanghai trader said, “Local buyers are actively searching for Indian homo-PP cargoes due to tight supply for this origin. Meanwhile, domestic suppliers continue to hold back their inventory with expectation of higher prices in the near term.”  

In Southeast Asia, market continues to follow a stable to firm trend with more new offers emerge today, especially for PP. In fact, a major Thailand producer has reopened offers for this week to Indonesia market with $20-40/t hike on the PP cargoes to $980/t for homo-PP injection and yarn and $1040/t for PP block copolymer, CIF term. Players in this market are reporting about an apparent tightness in PP supply, which is believed to be the main factor supporting firmer prices recently. Meanwhile, traders in Vietnam are very cautious when it comes to making fresh replenishment amid increased international offers. One of the sources commented, “We see most buyers active in the import market now are converters. Traders are more conservative as they are not having enough confidence about the medium term outlook. Therefore, we prefer to be on the side-line to monitor further development.”

In the PE market, ethylene costs continue to climb after market heard about a technical issue at ExxonMobil plant in Singapore. It is heard that one out of three crackers at the producer’s Singapore complex has been down for at least three weeks now, and recently its downstream production has also been affected. Customers were informed about this issue but no other details were released. Other producers are not in the mood for negotiation in the absence of sales pressure. A buyer in Vietnam received Middle East offers at $1100/t for HDPE film and $1100-1110/t for LLDPE film said, “Our supplier is not willing to give any discount as they claimed to have very small allocation for this month and that sales in the near-by China market is satisfactory. We have yet to hear any other new offers from Middle East but we expect other producers to raise their offers for March shipment. We are considering to purchase a small quantity only.

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