China Morning Snapshot – 04 July 2018

Despite starting the new trading day on a rather soft note, September delivery contract for both PP and LLDPE recovered all the losses by the end of the morning session. PP contract entered the break-time gaining CNY26/ton ($4/ton) to CNY9272/ton ($1204/ton without VAT) while LLDPE added CNY30/ton ($5/ton) to CNY9275/ton ($1204/ton without VAT).   

Thanks to stronger futures market, spot ground also see CNY100/ton ($16/ton) hike for homo-PP and CNY50/ton ($8/ton) for LLDPE film. At the time this report is published, homo-PP in Eastern China is traded at CNY9200-9400/ton ($1194-1220/ton without VAT), EXW China, cash equivalent. Spot LLDPE film in Northern China stands at CNY9250-9350/ton ($1201-1214/ton without VAT) with the same term.  

Total inventories at Sinopec and CNPC’s warehouses fell 35,000 tons from yesterday to approximate 690,000 tons as of 04 July 2018. There has been report that buying interest for LLDPE film is better this morning as converters in the agricultural film sector started making small replenishment at the lower end of the overall price range.

“Sales for other grade are still slow. Demand might not show any strong improvement in the near term as market is now putting more concern on the trade war and currency exchange rate. As a result, we are being extra cautious about replenishment,” a trader said.