Asia Daily PP PE Report 17 May 2016

In China, futures prices on Dalian Commodity Exchange extended the weakening trend on the second trading day of the week with both contract for PP and LLDPE recorded loses. September delivery contract for PP slashed CNY83/ton ($13/ton) to settled at CNY6693/ton ($877/ton with out VAT) while LLDPE closed CNY60/ton ($9/ton) lower at CNY7945/ton ($1042/ton without VAT).

Domestic producers announced new price lists at CNY50/ton ($8/ton) hike for spot local PP cargoes but continue to adjust PE prices down CNY50-100/ton ($8-15/ton) from yesterday amid weaning demand. A trader from Cantou commented, “Firmer propylene costs are holding the market in recent days, however weak demand might not support any price increment. We managed to conclude some deals for PP today, yet we are not very optimistic about market prospect in the coming month.”

In the import market, most suppliers are maintaining their offers unchanged from the previous trading days claiming firm propylene costs and limited supply to be the primary support. However, market participants are expressing their doubt toward the sustainability of this stable trend, citing stagnant buying interest might downplay seller’s effort in holding firm on their cargoes. A converter based in Fujian said, “There are several unexpected shutdown in the past few days that restore seller’s confidence. We are not expecting any significant price reduction in the immediate term, yet we refrain from making large purchases.”

Demand for PE meanwhile being reported to have significantly slowed down, especially for LDPE film grades. Many traders are not confident in giving offers, instead, collecting bid from customers to gauge the market acceptance levels. A trader in Guangzhou said, “Only HDPE blow molding grades attracted buyers, other than that, market is more in the quiet side. We are inviting regular customers to place buy ideas or bids for Middle East HDPE and LLDPE film cargoes and currently waiting for buyer’s feedback.”  

In Southeast Asia, sentiment remains quiet as buyers refrain from making fresh purchases amid deep concern regarding near term outlook. More traders open offers at reduced levels compared to last week to combat persistent sluggish demand. Most offers for Middle Eastern PE cargoes have breached below the $1200/ton threshold in the region with a Vietnamese buyer received Saudi Arabia LLDPE film at $1170/ton and HDPE film at $1140/ton CIF, LC AS term said, “We are not in the position to replenish material this week as we expect to see softer prices in the near term. Demand in local market is very weak, indeed, only LLDPE film cargoes witness relatively smaller drop than others due to tighter supply. The monsoon season has started and this might add more pressure to the already sluggish market.”

Meanwhile, players in Indonesia reported seeing another major domestic producer down adjusted their PE prices by $15/ton for HDPE film and $53/ton for LLDPE film compared to the last opening. A trader added, “Even with the latest price reductions, buyers seems not interested in buying. The fasting month is around the corner and many of our customers have started to reduce operation rate as a result of slower end product demand. We are not feeling very confident about the near term outlook.”

The regional PP market remains on the stable to softer path on the second trading day of the week though buying interest has not seen any improvement. Instead, buyers are withdrawing to the sideline and become more conservative in making purchases. A regional buyer reported, “Our peers are placing bid for Saudi Arabia homo-PP at $980/ton CIF Vietnam, LC AS term but we prefer to wait and see as near term outlook is rather cloudy. Domestic market is not much higher than this price level, which mean the price risk associated with the purchase is very high.”

Another Indonesian converter purchased Middle Eastern homo-PP at $1020/ton CIF, LC AS term added, “We buy only a small quantity as we are running low on inventories. Demand for our end product is slowing down, and it might be weaker in the coming month. We hope to obtain further discount on raw material prices in the near term.”

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