China Morning Snapshot: 10 January 2018

Dalian Commodity Exchange market responded positively to the surging energy complex. Both contracts for May delivery increased considerably in the morning session, reaching the highest levels seen since September 2017. PP futures gained CNY140/ton ($21/ton) at CNY9638/ton ($1263/ton without VAT). LLDPE futures jumped CNY165/ton ($25/ton) to CNY10100/ton ($1324/ton without VAT).

Sentiment in spot market improved visibly, especially in the LLDPE film market as arbitrage traders returning to leverage the wide price gap of CNY200-300/ton ($31-46/ton) between spot and futures markets. Spot LLDPE film in Northern China softened CNY50/ton ($8/ton) to be traded at CNY9800-9900/ton ($‎1285-1298/ton without VAT), EXW China, cash term.

Eastern China market stayed stable to CNY50/ton ($8/ton) firmer compared to yesterday, with spot homo-PP stands in the range CNY‎‎9400-9500/ton ($‎1232-1245/ton without VAT), EXW China, cash equivalent.

It appears that converters are left with no other options but to continue accepting higher offers due to a great potential that market would remain on the stable to firmer track in the near term. However, most purchases are limited to hand to mouth basis. Despite challenges facing suppliers in delivering the cargoes given the unfavourable weather condition, sales pressure might hold low.