Chinese market re-opens on firmer notes, limited activities

After a week long of Lunar New Year holidays, Chinese players started to come back to the market today, yet the general sentiment remains pretty quiet. In the absence of buyers, couple of traders attempted to increase their offers following the latest development in Southeast Asia market while expecting continued price increment in the near term.

Dalian Commodity Exchange concluded the first post-holiday trading session at a soft note, with both PP and LLDPE contracts slumped CNY60-67/ton ($9-10/ton). There are very limited movement in both local and import ground since converters are expected to only come back after the Chap Goh Mei celebration on 11 February. According to private data, total PP and PE inventories at major domestic producers’ warehouses have accumulated to about 930,000 tons throughout the holiday week, yet it is still about 5 per cent below the same period last year. A trader said, “We think the pressure is not very strong and therefore, suppliers might attempt to hold firm stance on their cargoes.”

In the import market, Qatar’s LLDPE film offered at $1205-1215/ton CFR China, TT in advance term, some $20-30/ton higher than last month. A trader commented, “Buyers are not around at the moment, however, with the current trend observed in Southeast Asia and the monomers market, we think that chances for prices to go softer is very thin. Market direction shall be clearer in the coming week.” 

With tightening supply for both PP and PE stemming from overseas plants shutdown and strong upstream costs, especially ethylene prices; it appears that market is set to move higher in the near term. Yet, demand condition is still a concern to many players.