Asia Daily PP PE Report 13 Apr 2016

In China, futures prices on Dalian Commodity Exchange reverted the firming trend yesterday to complete the rocking trading session at lower levels. PP futures for September delivery edged down CNY14/t ($2/t) at CNY6979/t ($923/t without VAT) while LLDPE futures slashed CNY80/t ($12/t) to settle at CNY8445/t ($1117/t without VAT).  

Domestic traders were confident enough to maintain spot PP and PE offers unchanged from yesterday, yet falling futures prices during the second half of the trading session forced sellers to cut prices by CNY50-100/t ($8-15/t) to attract buying interest. Players reported very limited number of deal concluded in both local and import market today.

A trader in Ningbo offered domestic homo-PP cargoes at CNY7150-7200/t ($945-950/t exc VAT) EXW China, including VAT said, “We did not received any enquiries for locally held parcels today as our customers are not having confidence in replenishing inventories. We only managed to sell a small quantity of Indian homo-PP at $1040/t CFR China, LC 90 days term, which doesn’t look so satisfactory to us.” Meanwhile, some other traders have expressed their intention to deplete on-hand cargoes before the ChinaPlast exhibition with a market source added, “We want to sell quick as we think with the current market resistance, local inventory might pile up and pressurize the overall sentiment in the coming weeks. Many other sellers are offering attractive discounts to entice demand and we are not felling so comfortable.”

The import market sees no better scenario than local trades and most sellers are complaining about the difficulties in closing deals. A distributor offered Brazilian and Saudi Arabia HDPE blow molding at $1170/t CFR China, LC 90 days term said, “Most deals are concluded at $10-20/t lower, therefore we think that market prices might not be able to firm up in the near term. Weakening futures market has psychologically impacted buyers and we feel not so optimistic about the near term prospect.”

In Southeast Asia, the firming sentiment appears to have been interrupted by the visible weaker buying interest and suppliers are giving slight discount to entice demand. In fact, Indonesian buyers reported to have received offers for Vietnamese homo-PP at $10/t lower than last week at $1150-1170/t CIF, LC AS term. A buyer said, “Demand in local Indonesia has slowed down evidently, however domestic sellers are still in the position to maintain firm prices. We think the latest import offers are pretty attractive and we might talk to our supplier to purchase some quantity.” Buyers in Vietnam meanwhile are reporting weakening domestic homo-PP prices as drought deterred buying from woven bag makers and traders want to cut short profit margins of previous lower costs cargoes.

Chinese traders seem to be more active in Southeast Asian market these days as a result of sluggish local demand. A Zhejiang based trader sold 700 tons of coal based PP to Indonesia at $1030-1040/t CIF term today, after concluded 1000 tons at the same price level last Friday said, “We need to exploit export opportunities as domestic ground is dwindling. We managed to sell quite well to Indonesia these two weeks, and we hope to expand our market base.”

The Southeast Asian PE market did not see much movement today, yet the HDPE film business does not appears to be in the favor of the firming trend due to relatively more comfortable supply than other grades. A regional producer offered HDPE film, injection and blow molding to Vietnam earlier this week at $1250/t CIF term said, “So far we only managed to sell a small quantity of non-film cargoes and we find it very difficult to push HDPE film parcels out. Most of our customer are placing bid at at least $30/t lower than initial offers and we are not confident regarding the near term outlook considering the amount of re-export cargoes coming from China these two weeks.”

Even demand in Indonesia is not as strong as market has expected at the time converters should be preparing for the Hari Raya season. Most traders are now selling HDPE film and LLDPE film below producer’s price list and yet the number of deal concluded are rather unsatisfactory.

In the production news, Thailand’s PTT and South Korea’s YNCC have both restarted their crackers after scheduled maintenance shutdown. Many players expect ethylene supply to be eased a little in the coming month.

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