Asia Daily PP PE Report 08 Apr 2016

In China, futures prices on Dalian Commodity Exchange ended the week on softer note with contract number 1609 for PP slipped CNY171/t ($26/t) to CNY6701/t ($885/t without VAT). LLDPE contract loses another CNY65/t ($10/t) to settle at CNY8270/t ($1092/t without VAT).

A week of falling futures prices has not spared the domestic market with spot PP and PE offers stepped back another CNY50-100/t ($8-15/t) compared to yesterday. However, sentiment continues to weaken and buying interest remains below market expectation, trader reported. A trader from Xiamen said, “We are willing to give CNY100/t ($15/t) discount on deal for serious buyers since there is so much of hesitation these day. We are not earning any profit by selling at this level, yet demand is just so disappointed. Weaker futures prices have overshadowed the firming propylene monomer costs and this might prevent and price hike attempt in the near term.”

In the import market, a major Indian producer announced new homo-PP offer to China at $90/t higher than last month at $1040/t CFR China, LC 30 days basis. A player received the new offer commented, “We were informed that there is no raffia cargoes available this time; yet we find this offer a little unattractive. Demand is weakening and we do expect some downward price adjustment in the near term. Our Indian supplier has delayed several other cargoes and would only be able to fulfill by the next 1-2 months time.”

In Southeast Asia, market sentiment remains firm and rebounded energy market has fuelled optimism among traders. Overall offer levels for both PP and PE within the region see little changes, however, limited number of deals are reported at discount. A major Indian producer announce new homo-PP prices to Vietnam at $50/t increased from last month to reach $1110/t CIF Vietnam, LC AS term. An agent offered on behalf of the producer commented, “Our principal only has homo-PP injection cargoes this time, yet we find this offer to be a little too high. We are also offering Middle East homo-PP at $1070/t with the same term and so far buyer’s response isn’t so good. We hope with the recent hike in propylene monomer costs, market would find more support to remain firm in the near term.” Meanwhile, Vietnamese traders are attempting to adjust up prices for locally held cargoes after almost a week of under downward pressure. Players commented on this matter saying that market might not be able to see an immediate rebound since buyer resistance is still in place.

The PE market follows a relatively stable trend with most players are expecting firmer stance on LLDPE film due to supply tightness. In fact, Middle East LLDPE film cargoes re-export to Vietnam has breached the $1300/t threshold to reach $1305/t CIF, LC AS term while Korean LLDPE film was also offered at only $5/t below this re-export cargoes. A trader purchased Korean LLDPE film with $40/t discount said, “We have also purchased several other origins at the same level. We think this could be the ceiling price at the moment since we couldn’t achieve higher than this level by re-selling locally.” Players in Malaysia are also reporting tightness in LLDPE film supply domestically with a source added, “Due to some local production issues, we find LLDPE film cargoes are very limited now. Some of our customers are willing to accept higher prices to secure small quantity with expectation that prices might see additional hike in the near term.”

In the production news, Thailand’s PTT has restarted its 1 million tons/year ethane cracker and all PE lines after a major maintenance shutdown late Feb, and producer’s supply might normalize by end of this month.

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