China Morning Snapshot - 03 August 2018

Dalian Commodity Exchange remains on the high tide this morning and at some points, September delivery contract for PP surged above the CNY10,000/ton mark for the first time since 16 September 2014.  PP futures have now commanded a premium of CNY300/ton ($44/ton) over LLDPE.

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

The domestic spot market is totally hot with arbitrage traders actively scouting for competitive cargoes. “But we don’t know how to open offers now. The surge is just too irrational and might cool off very soon,” a spot trader said. 

On the other hand, converters are just too conservative to accept the drastic hike, which gives a strong encouragement for staying on the sideline. “We would be running into the negative zone if accepting the current prices. Demand for our end product has not seen any major up-tick and therefore, we prefer to wait for the sentiment to come down before fresh buy,” a converter informed. 

Total inventories at Sinopec and CNPC’s warehouses reduced 10,000 tons from yesterday at 665,000 tons as on 03 August 2018.