Asia Daily PP PE Report 26 Jan 2016

In China, futures prices on Dalian Commodity Exchange defeat the weakening trend in the energy market to advance CNY90/t ($14/t) for PP and CNY155/t ($24/t) for LLDPE. Contract number 1605 finished the trading day at CNY6024/t ($783/t without VAT) for PP futures and at CNY8275/t ($1075/t without VAT) for LLDPE futures.

Spot offers for both PP and PE in local market gain CNY50-100/t ($8-16/t) compared to beginning of the week on the face of tight supply condition, especially for PE grades. On the other side of the market, demand is reported to be subdued as buyers are now going of for the Chinese New Year holidays.

A trader in Xiamen said, “Supply for PE in both local and import market is quite tight at the moment and in fact, our Thai supplier has not offered any LLDPE film cargoes in the past one month. Our customers in northern area are still rushing for last minutes orders for agriculture film. We think that the market will mostly follow stable trend in the near term.”

Other contacts are showing less optimistic view citing weak energy market to be the main bothersome factor that could possibly affect the sentiment. One of the sources from Shanghai added, “We see that market acceptance towards the higher range of the offer is not so strong and many of our regular buyers are off for holidays by now. We see HDPE film is having a large premium over other non-film grades.”

The PP market also sustains the stable trend throughout this month with the support from firm upstream costs. A trader in Ningbo commented, “Our customers are buying hand-to-mouth basis but we ourselves are not having confidence to take position. We are waiting for overseas supplier to announce new prices this week before making any further decision.”

In Southeast Asia market, a major regional producer has announced new PP and PE prices with reduction compared to last month. Meanwhile, the market is still waiting for other Middle Eastern producers to open their new prices. A buyer in SEA market commented, “With the current development in the upstream markets, it is risky to make large purchase now. However, most suppliers claimed to have limited supply, which support the market in the past week. We expect to see some discounts for offers at the higher range of the overall offers as demand in the nearby China market is slowing down.”

Major overseas maker in the PP market has also started to open new offers mostly at stable level compared to the previous price lists. Indonesian buyers received Thai homo-PP at $910/t CIF term said; “We feel it is not competitive as we can obtain local material at the same level but free delivery term. Demand in Indonesia is not that strong and buyers will only buy small quantity if suppliers are open to negotiation.” Meanwhile, in Vietnam, a major Saudi Arabia producer open new price at $840/t CIF for homo-PP yarn and injection grade, stable compared to the last offer. A buyer said, “We negotiated and agreed to purchase some quantity at $10/t discount, but our supplier claimed that they have sold out the available quantity. Import duty for homo-PP from Middle East to Vietnam will be adjusted down to 1% in March 2016, hence we prefer to buy slowly to monitor further development.”

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