Asia Daily PP PE Report 30 Mar 2016

In China, a mixed sentiment is observed on Dalian Commodity Exchange today with PP futures continue to gain CNY70/t ($11/t) from the previous trading session while LLDPE futures edged lower by CNY60/t ($9/t). Both contract settled at CNY7379/t ($973/t without VAT) and CNY9265/t ($1222/t without VAT) respectively.

Domestic spot PP offers see little changes from earlier trading day while there are some CNY50-100/t ($8-15/t) reduction reported on LLDPE film cargoes. A trader from Zhejiang reported, “Most traders are holding very firm stance on their cargoes waiting for local producer to open new price for April at higher level. We couldn’t close many deals today as most buyers are holding wait and see attitude and some already replenished sufficient stock. We think that market might not sustain the firming trend in the medium term given the lack of demand and pressure from weakening future market. The peak seasonal agriculture film demand should also retreat by mid of next month.”

Players reported seeing a more of stabilizing trend in the import homo-PP market this week after a speedy rally in the past one month. A straw maker in Fujian commented, “Import PP seems to loose firming speed now, yet we are still sourcing from local market as domestic material is technically cheaper than import as much as CNY1000/t ($153/t). Demand for our end product is healthy at the moment, therefore we need to replenish frequently. Our supplier informed that local supply might remain tight until end of April due to several scheduled turnaround in the country.”   

In Southeast Asia, polyolefin market continues to track the firming trend in spite of visible buyer resistance towards the current price levels. In Vietnam, players are receiving an increasing number of re-export PE cargoes from China, arousing a strong wave of concern over the state of demand in Asia’s biggest polymer importer. Besides a wide variety of HDPE film cargoes offered based on re-export term, there are LDPE film parcels available with the same basis at $1290-1310/t for mid-end of April shipment. A trader commented, “It seems that China market is loosing buying appetite and this is not a good indicator for S. Asian buyers. Local demand has slowed down significantly and we prefer to be cautious when it come to making fresh purchases.” Elsewhere, players in Malaysia are complaining about tight LLDPE film supply, which pushes prices up on a daily basis. A converter added, “We were only able to secure sufficient material to cover production in the first half of April and we need to make additional replenishment in the coming day. There is very limited offer for LLDPE film now. We are waiting for our international suppliers to announce new prices.”

A similar scenario is seen in the PP market with most suppliers either claimed to have sold out allocation or lifted their prices. An international distributor commented, “We have sold out all available cargoes to Indonesia market this week. Demand for homo-PP here is good and we expect further hike in the near term.” In Vietnam, Chinese coal based PP cargoes are also reached the level $1095/t CIF, LC AS, which many buyers find it a little unattractive. A traders said, “Propylene monomer is softening while crude oil is also weaker recently, from which we feel lack of confidence to make purchases at the current level. Local buyers are resisting high prices and only buy on hand-to-mouth basis. We think tight supply might support the market throughout the month of April, however May outlook seems cloudy to us.”    

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