China morning snapshot: 20 December 2017

Both futures contracts for PP and LLDPE on Dalian Commodity Exchange concluded the morning session on 20 December 2017 at firmer notes. PP futures gained CNY88/ton ($13/ton) to reach CNY9254/ton ($1198/ton without VAT) while LLDPE contract added CNY95/ton ($14/ton) at CNY9660/ton ($1251/ton without VAT).

Spot PP market appear to have more support than PE, with trader continue lifting prices by another CNY50-100/ton ($8-15/ton) from the previous session, to CNY9100-9350/ton ($1178-1211/ton without VAT), EXW Eastern China, cash equivalent.

In Northern China, LLDPE C4 film traded at stable to CNY50/ton ($8/ton) higher, in the range CNY9550-9700/ton ($1237-1256/ton without VAT), with the same delivery term.     

Real demand from converters remains relatively moderate and with the recent increases, many are unable to transfer the costs to end products prices. However, arbitrage traders are very much into bullish bet on futures market, which encourage active purchasing in spot ground. Producers are not facing any major inventories pressure, signaling a stable trend ahead.