Asia Daily PP PE Report 29 Apr 2016

In China, futures prices on Dalian Commodity Exchange continue to move south today with contract 1609 for PP settled CNY42/t ($6/t) lower than the previous trading session reaching CNY6955/t ($915/t without VAT). Future contract for LLDPE fell CNY65/t ($10/t) to settle at CNY8645/t ($1139/t without VAT).

Domestic producers have indicated initial price list for May delivery cargoes with CNY50-100/t ($8-16/t) higher for PE and commodity PP grades prices remain unchanged. In distribution market meanwhile traders are giving CNY50-100/t ($8-16/t) discount to attract buying interest, yet many sellers are complaining about difficulties in concluding deal. A market source commented, “We haven’t been able to close any deal today since buyers return from ChinaPlast exhibition and going off for Labour Day. We are a little concern about the recent firming propylene costs; however May-June is the off-peak season for PP applications, which mean that prices might not follow the upstream trend closely.”

In the import market, players were informed that Iranian supplier are focusing on fulfilling domestic demand, however, considering the market size, many believed that export would remain a vital business area for the newly sanctions-free supplier. Another trader from Chongqing reported, “We were initially offering Saudi homo-PP cargoes at $1020/t CFR China, LC AS term, however we decided to divert the cargoes to other market later due to lack of local buying interest. Market is entering traditional weak demand season, hence we prefer to stay cautious till we have clear view about market direction.”    

In Southeast Asia, there are very limited activities on the last trading day of the week as players enter holiday mood after several days of quiet sentiment. A trader in Vietnam said, “We have not received any offers from our regular suppliers these two days and so to the demand side, no purchase enquiries from customers. Market might only see more activities after player return to their desks next Wednesday. Buying interest is weaning and this might downplay the near term market prospect; we hope to see stronger buyer confidence alongside with the firming energy market.”

Meanwhile, an Indonesian converter purchase local homo-PP yarn at $1305/t FD Indonesia, cash term said, “We think market has reached the peak and despite firming propylene costs, PP prices might remain relatively stable in the coming day Demand for our end product is weakening and with the forthcoming fasting month, we plan to reduce operation rate soon.”

Similar situation is observed in the PE market, however expectation that more regional crackers come back after scheduled turnaround would add more ethylene supply to the already inertia market and bring along downward pressure. An international trader received offers for Korean LLDPE film at $1220/t FOB Korea, LC AS term said, “We prefer to stay on the side-line till mid of next month to see clearer direction before making decision. We expect Indonesia and Malaysia market would remain slow in the coming week due to the Israk dan Mikraj holidays.”

In the Production Status update, Korea’s Lotte Chemical is planning to restart it naphtha cracker by 6 May 2016 after 25 days maintenance shutdown. The cracker has annual production capacity of 1 million ton/year of ethylene and 480,000 ton/year of propylene.