Asia Daily PP PE Report 03 May 2016

In China, Dalian Commodity Exchange resumes trading today with the weakening trend persist its way. Futures contract number 1609 for PP settled CNY121/t ($19/t) lower at CNY6821/t ($901/t without VAT) and LLDPE contract loses as much as CNY325/t ($50/t) from the previous trading session to close at CNY8395/t ($1109/t without VAT).

Falling futures trade has not spared the spot domestic market as sellers are feeling wary about the near term prospect, in which they moved to cut PP prices by CNY50-100/t ($8-15/t) and open new prices for PE at CNY50-200/t ($8-31/t) lower. Even with the fresh reductions, buyers seems not in rush to make any purchases with a converter in Shanghai commented, “We are holding comfortable stock now and the peak seasonal demand for agriculture film is over, hence demand for our end product is not very strong. We expect to see a gradual downward movement in the near term as persistent supply tightness might prevent any radical changes.”

In the import market, traders are reporting disappointed demand condition with a source said, “We are offering some Indian homo-PP cargoes at $985/t CFR China term, yet our regular buyers are placing bid at only $930-950/t. We are not intending to accept these bid levels at the moment, however we are willing to talk further with aim to deplete cargoes before Jun.”  

In the Plant Status news, Dong Hua Petrochemical is forced to shutdown its 660,000 ton/year PDH plant today to resolve technical issues that trouble the company in past weeks. As the result, the company has also taken its 400,000 ton/year PP unit off-stream due to lack of propylene supply. Ningxia Baofeng Energy Group Co Ltd also reportedly shutdown its coal based PP and PE units for 25 days maintenance work today. Each unit has an annual capacity of 300,000 tons/year.    

In Southeast Asia, the quiet sentiment seen during ChinaPlast week remains in place during the first trading days of the month with couple of major markets are still on holidays or entering holidays soon. Trading activities are rather limited and there are few new offers from Middle Eastern maker emerged at stable to firmer levels. Indeed, the maker elected to lift PP prices by $20/ton compared to last month to reach $1080/t for homo-PP grades and $1150/t for PP block copolymer, based on CIF Vietnam, LC AS term. A buyer commented on the new prices saying, “Most players would only return to their desks tomorrow and thereafter market might see more movement. However, we believed PP market has seen the peak and might not be able to firm up any further given limited demand.”

Domestic offers for PP in Indonesia has also been adjusted down by approximate $20/ton compared to last week in the face of strong buyer resistance. A trader in the country reported, “We see very little buying interest even after the price reduction. We are not expecting any pick up in demand in the coming days since market will be off again by mid of the week.”

Offers at the upper range in the PE market meanwhile facing tremendous difficulties to conclude deal and sellers have started to step back on their prices. Traders are hoping that production issue at one of the Singaporean crackers might keep the upstream market firm and create some support for the market in the near term. An international trader added, “At the same time, we are not confident about the medium term outlook, therefore we are trying to deplete on hand cargoes. Indonesia and Malaysia market might see drastic slow down toward the end of the month as the Lebaran is around the corner.”

Supply is expected to slowly come back after producers resolve technical issues they faced previously. An international trader added, “Our Middle Eastern supplier has managed to normalize production rate after several mechanical glitches occurred past months. Today we received additional LLDPE film cargoes, however market is very quiet after ChinaPlast event.”

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