Asia Daily PP PE Report 01 Mar 2016

In China, future trading on Dalian Commodity Exchange posted the second consecutive day of firming up this week with PP increased CNY96/t ($15/t) to reach CNY6606/t ($862/t without VAT). LLDPE futures witnessed larger increases of CNY175/t ($27/t) and settled at CNY8950/t ($1168/t without VAT). 

Healthy demand for LLDPE film continue to give sellers more confidence in lifting their spot offers in local market by additional CNY100/t ($15/t) compared to yesterday. Other grades are reported to remain mostly unchanged.

In the import market, more international suppliers open new offers today with $10-35/t higher than last month. A trader received Thailand PE offer at $1140/t for HDPE film, $1150/t for HDPE yarn and LDPE film, all on CFR China LC AS term said, “Our Thai supplier is having maintenance shutdown at their plant, hence they will only be able to deliver the cargoes by Apr. We expect to see a pick up in demand within March, while firming upstream costs stemming from a series of scheduled shutdown could give more room for PE prices to firm up in the coming days.”

Market rumour is talking about an unscheduled switching in production of HDPE blow molding to other product in the same line at some Iranian plants, which tighten the availability of this grade. In contrast, persistent long supply and weak demand has kept Iranian and USA HDPE injection cargoes at below $1000/t threshold since late last year. Demand appears to pick up gradually with a trader in Yuyao commented, “We started to received more purchase enquiries from our regular customers while auction activities for coal-based PP is satisfactory today. We are feeling more optimistic about the market outlook in the near term.”

In Southeast Asia, the regional PP market carries a real mixture in term of sentiment; however, the firming trend is what every market has in common at the moment. In fact, after receiving $40-50/t hike on Indian and Saudi Arabia homo-PP cargoes compared to last week, Vietnamese players are not convinced with such rapid upsurge in prices and refraining from making fresh purchases. A trader said, “Limited supply would remain the primary factor to support the firming trend in the import market. However, local market is not catching up that quickly as buyers are mostly stocked up. We are not having enough confidence to purchase deep-sea cargoes at the price above $900/t level now.” Meanwhile, the “hotness” in the Indonesian PP market remains in place and one of the major producers in the country has stopped offering to some areas today due to limited supply, according to players. A trader added, “Most of our regular customers have replenished some quantity and they are cautiously monitoring the sustainability of the current firming trend. Supply in the local market is tight and we are not having much quantity at the moment. We think local PP prices might continue to move up in the coming days.”

The PE market completed the second trading day of the week on the stable to firm note while buyers are accepting higher prices amid limited supply. A converter in Malaysia received Middle East LDPE film at $1080/t CIF, LC AS term reported, “It is seller’s market now and we are left with very little bargaining power. One of our Saudi Arabia suppliers is encountering plant issues from which they are not having much allocation for this month. Demand for our end product is regular, hence we are still buying according to our need.” A major Thailand producer added, “We have sold out March allocation last week and this week we are receiving a good number of enquiries for April shipment. We think there might be some slight increases in the next opening.” Market has also reported some re-export USA HDPE injection cargoes from China to Vietnam emerged at $1065/t CIF, TT in advance term.

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