Asia Daily PP PE Report 04 May 2016

In China, futures prices on Dalian Commodity Exchange extended the softening trend today, however the weakening speed appears to slow down. Contract number 1609 for PP settled at CNY10/ton ($2/ton) lower than yesterday at CNY6818/ton ($897/ton without VAT) while LLDPE slashed another CNY105/ton ($16/ton) to close at CNY8295/ton ($1090/ton without VAT).

Spot PP and PE offers in domestic market have followed futures trading closely and see another CNY50-200/ton ($8-31/ton) reduction from yesterday session. In spite of continuous downward movement, buyers are not having a strong urge to make fresh replenishment.

A trader in Guangxi regarded May and June as traditional low demand season for PP, in which the source expressed little confidence in the near term outlook. The trader added, “We received more enquiries yesterday than today and we do expect further price reduction in the coming day. Meanwhile, we are looking for opportunity to export coal-based cargoes to Southeast Asia market with hope to achieve better margins.”

Players in the import market reported seeing Iranian HDPE film cargoes landed at $1070/t level CFR China today, and pressure on HDPE market might cultivate further as the end of agriculture film season encouraged some domestic swing plants to produce more of HDPE, allowing more supply to come to market. A trader from Linyi commented, “We think demand for LLDPE film might continue to weaken in the coming days despite tight supply stemming from several shutdown. Falling futures market shy away many buyers and affecting the general sentiment.”

In Southeast Asia, market sentiment has not seen much improvement as the week proceed and although there is no disruptive movement when it comes to prices; strong buyer resistance is straining offers at the higher end of the overall range.

A Saudi Arabia producer announced new PP and PE prices yesterday to Vietnam at stable to firmer level compared to last month is currently collecting bid from customers before concluding final prices. An agent offer on behalf of the maker commented, “Most of our customers are placing bid for homo-PP at $60/t lower than the initial offer level and at the moment we are waiting for the supplier’s feedback. Buying interest is not that strong, and we find homo-PP injection is especially lack of demand. We hope market would sustain the stable trend in the near term with the support from limited supply.”

In the PE market, HDPE cargoes continue to face downward pressure, as mediocre demand is not catching up with the supply levels. Indeed, a Thailand producer announced fresh offers to Vietnam today at $10/t lower than last week, yet buyers are not showing eager to make replenishment with expectation to see better prices on the coming days. Meanwhile, a Malaysian converter received offer for Middle East HDPE film at $1180/t CIF Malaysia, LC AS term commented, “Domestic supply is not as confortable as it is in the import market. We are having sufficient stock for production, but we are planning to import a small quantity for buffering. Demand for our end product is still regular but as strong as expected.”

Even hot item like LLDPE film is now feeling the pressure to loosen its stance over weakening demand. A regional buyer reported, “We received offers for prompt Saudi LLDPE film cargoes at $1230/t FCA Vietnam, therefore we placed bid for deep-seas cargoes at $1200/t CIF term, some $40/t lower than initial offer. We think this is reasonable price at the current market condition and now waiting for the supplier’s feedback. We are trying to regain the firm stance in domestic market after couple of weeks selling at discount given low LLDPE film availability locally.”   

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