China Morning Snapshot: 02 January 2018

Futures market skyrocketed in the morning session, sending May delivery contracts to three months high levels. LLDPE futures leap CNY315/ton ($48/ton) to CNY10,085/ton ($1326/ton without VAT) while PP contract firmed up CNY274/ton ($42/ton), reaching CNY9556/ton ($1257/ton without VAT).
  

Strong futures market on the first trading day of the year set the tone for spot market. Suppliers in Eastern China area are lifting homo-PP prices by CNY50-150/ton ($8-23/ton) to CNY‎9300-9450/ton ($1223-1243/ton without VAT), EXW China, cash equivalent.

In the Northern area, spot LLDPE film offers hike CNY100-200/ton ($15-31/ton), ranging CNY9800-9900/ton ($1289-1302/ton without VAT), with the same term.

A great number of deals are reported in the first half of the day as arbitrage traders rush to channel cargoes to futures trading to gain the price differential. Sources are expecting that such active condition might allow local producers to deplete the inventories build up throughout the holiday, which might keeps spot ground on the firm track in the near term. At the meantime, converters are more cautious about making immediate replenishment with strong resistance observed on cargoes priced at the upper end of the overall range.