China Morning Snapshot - 12 November 2018

Dalian Commodity Exchange follows the global equity market to open the first trading day of the week falling into the red territories. Both contracts for PP and LLDPE shred three digits in value by the end of today’s morning session.

Details on the spot and futures prices are shown in the following table:

Total inventories at Sinopec and CNPC’s warehouses piled up 75,000 tons from last Friday to 850,000 tons as on 12 November 2018.

It is interesting that the price gap between January delivery contract for PP on Dalian Commodity Exchange and spot market is now at the record high this year of CNY773-923/ton ($111-133/ton), and yet arbitrage traders remains very quiet in channeling cargoes from one platform to the other. 

The plunge in the futures market this morning negatively impacts the sentiment in the spot ground and there has been a tense discussion among players about the unusual price gap between the two markets. “Either futures market has to rebound or spot market has to go down further. In either case, it is not good for traders like us,” a market source said.