Asia Daily PP PE Report 02 Mar 2016

In China, futures prices on Dalian Commodity Exchange extended the firming trend for the third consecutive day. Contract number 1605 for May delivery advanced CNY140/t ($21/t) for PP to close at CNY6692/t ($873/t without VAT). Meanwhile, LLDPE contract increased CNY85/t ($13/t) to reach CNY9010/t ($1176/t without VAT).  

Physical spot offers for both PP and PE added another CNY100/t ($15/t) from yesterday with soaring futures trade cushioning the increases. On the other side of the market, every trader’s most wanted demand condition has finally arrived with converters return to the market for another round of stock replenishment after a long break. A trader in Yuyao commented, “Local demand pick up impressively and in fact we managed to conclude a satisfactory number of deal today. Our regular customers are apparently convinced that the probability of further price hike is pretty high in the near term given tight supply from overseas suppliers.” Many traders elected to suspend their offers toward the end of the trading day hoping to sell the remaining cargoes in hand at better margins.

Sellers in the import market are also feeling more optimistic with the pick up in demand with a trader sold Thai HDPE film at $1110-1115/t CFR China, LC AS term said, “We are happy with our sales today. Besides, we also received offers for irregular cargoes from Nigeria at $1120/t CFR China for both HDPE and LLDPE film, but we are not very interested.”  

In Southeast Asia, the spillover effect from China started to show, especially in Vietnam market. Middle East homo-PP offer to the country continue to gain $10-20/t compared to the beginning of the week to reach $940/t CIF Vietnam, LC AS

term. A trader purchased 100 tons of this cargoes after obtain $10/t discount from the initial offer said, “Demand in China pick up would keep the whole market on the firming trend in the near term. Our cargoes will arrive latest by beginning of Apr., which we think a little risky but we really need to replenish some stock. Demand in local market is good in spite of higher prices.” Meanwhile, other traders are planning to introduce additional price hike to local buyers in the coming days with the support from firming international trading ground.

The PE market is no less excitement as tight supply is giving suppliers an upper hand in price negotiation. A Vietnamese buyer purchased 500 tons of Saudi Arabia LLDPE film at $1140/t CIF Vietnam, LC AS term said, “Our supplier refused any discount request regardless of the purchased quantity due to tight availability. We also procured additional 100 tons of off grade material from the same seller. Local demand is very robust and we think this condition might sustain in the coming weeks.” In contrast, the Malaysia market is slightly dull and buyers are not in the position to make large purchases. One of the sources contacted by CommoPlast said, “Demand for our end product is not very strong while weak local currency and higher operating costs are eating into our profits. We recently try to switch to recycled grade to reduce cost burden and only purchase prime cargoes on need basis.”         

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