China Morning Snapshot: 27 March 2018

Dalian Commodity Exchange opens sharply higher on news that Chinese government is talking to the USA to resolve the trade tensions. However, the market loses steam toward the break time. Both PP and LLDPE futures ended the morning session adding only CNY35/ton ($6/ton) at CNY8568/ton ($1170/ton without VAT) and CNY9150/ton ($1249/ton without VAT) respectively.         

Spot offers for both PP and PE in domestic market remained largely stable day on day. Homo-PP traded in Eastern China at CNY‎‎‎8450-8550/ton ($‎‎1154-1167/ton without VAT). LLDPE film in Northern area is at CNY9100-9300/ton ($‎‎1242-1270/ton without VAT), all based on EXW China, cash equivalent.

Trading activities in local ground pick up visibly, which help to absorb 45,000 tons of PP and PE inventories at major producers’ warehouses, bringing the latest stock level to approximate 920,000 tons as of 27 March 2018. Converters are seen actively placing orders with belief that local ground might be nearing the bottom. “Besides, most manufacturers are enjoying healthy profit at the current raw material prices,” a seller commented.

Chinese players will be away for Tomb-sweeping festival from 5 to 7 April, which might lead to accumulated inventories at seller’s side and prevent the market from rebound from the current condition.