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In China, futures prices on Dalian Commodity Exchange ended the morning session with drastic reduction for both PP and LLDPE contracts. January delivery futures plunged CNY454/ton ($67/ton) for PP and CNY515/ton ($76/ton) for LLDPE. This, if persist in the next couple of days, could set a blow to the bullish spot sentiment that has been in place since early October 2016, players said.

This notion is strongly supported by converters, who are suffering from narrowed profit margins due to raising raw material prices in the past one month. A yarn manufacturer commented, “Our confidence in near term outlook got hit very hard this morning. What we plan to do now is just wait and see. Our local suppliers have down adjusted their offers by CNY150/ton ($22/ton), but we think this is not sufficient.” The source expected more discounts to come in the near term.

Meanwhile, traders in the country carry more optimistic view saying that limited supply from both local and international suppliers would prevent spot PP and PE prices from any significant fall as an effect of sinking futures trade. One of the market source added, “We offered CNY100-150/ton ($15-22/ton) discounts, however trading activities are really slow this morning. We think spot market might witness price correction this week if futures trades do not revive. That is not very good news to traders. Yet, local inventories are still low, far from a point that suppliers have to commit to large price cut. Hence, we would monitor further development before any major decision is made.”

The general sentiment in China sank to the ground this morning and players have immediately adopted the wait and see stance. CommoPlast will continue to follow up on the market movement and further update shall be available soon.