Asia Daily PP PE Report 16 Mar 2016

In China, futures prices on Dalian Commodity Exchange ended the weakening trend today with an impressive rebound on both contract PP and LLDPE. Contract 1605 for May delivery leap CNY173/t ($27/t) for PP to settle at CNY7021/t ($920/t without VAT) and skyrocketed CNY340/t ($52/t) for LLDPE to reach CNY9035/t ($1184/t without VAT).        

Domestic sellers appear to regain confidence in market outlook after seeing drastic upsurge recorded in futures trading, hence lifted spot offers for both PP and PE by CNY100/t ($15/t) from yesterday’s levels. A trader from Xiamen commented, “A series of unplanned shutdown at local plants have yet to be reflected on spot offers, and it comes to surprised to us that futures trading responded to these news much faster. We do not see any prospect of a downturn in local market in the near term, as supply should be tightened during the planned turnaround at some major domestic makers in the next two months.”

A trader in Guangzhou reported seeing better deals concluded for PE today compared to previous trading sessions. The source added, “More Iranian cargoes are arriving to the main port, easing local supply by certain extent. We think the market might not see any significant hike in the coming days; instead it is giving buyers some time to accept the current price level before further adjustment is made.”

A trader in Ningbo purchased South African homo-PP at $960/t CFR China, LC 90 days basis, added, “Import supply for homo-PP is very tight and there is nothing below $950/t threshold for regular origins at the moment. We do think the market would sustain the firming trend at least till April considering the current supply condition.”

In Southeast Asian PE market, the firming sentiment is strengthened as ethylene costs continue to climb during the maintenance season at Asian naphtha crackers. Most PE suppliers are attempting further hike on the back of firming upstream costs and limited supply. A major Thailand producer claimed to have sold out available HDPE allocation this week to Vietnam after implemented $25-30/t increased on these cargoes. A source from the producer informed, “We did not agree to any discount as we are not having sufficient quantity at the moment. We have stopped offering by now and we think prices might move above $1200/t level in the next opening.” Meanwhile, another converter purchased Middle East HDPE film and at LLDPE film at $1170 and 1180/t respectively said, “We bid for $10/t discount but our supplier refused to accept. We have replenished material for half of April usage and we plan to buy additional quantity in the coming days. Demand for our end product is regular.” Vietnamese players also reported the presence of re-export Middle Eastern and Iranian HDPE film from Hong Kong warehouse at $1165-1170/t CIF term. A buyer commented, “This is not the best price in the market, however, the promptness is an added advantage. We have purchased a small quantity of this material.” Regional players are now raising concern over the time lap between the restart schedule of ethylene crackers and the start of the Ramadan month, which is considered to be a little too short for any price correction. Yet, the state of demand in China should not be ignored when it comes to forecasting the market direction, some buyer concurred.  

The PP market is no less excitement and buyers are waiting for another round of offer from international suppliers. Meanwhile, Indonesian buyers reportedly received Thai homo-PP injection at $15/t higher than the level seen at beginning of the month to reach $1060/t CIF Indonesia, LC AS term. A buyer added, “These prices appears to be a bit high, however local supply is really tight. We think this condition is not going to improve any time so soon.” Local homo-PP prices in Vietnam and Indonesia continue to firm up following the international trend. A Vietnamese trader reported, “We lifted our locally held cargoes to VND26,000,000/t ($1060/t without VAT) FD Vietnam, however our customers are not very receptive. We plans to remain firm on our offers as international suppliers are not having much allocation this month.”

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