FocusIndia's PE imports almost double

28 September 2007 08:03  [Source: ICIS news]

Polyethylene (PE) imports into India have very nearly doubled in the last quarterBy Prema Viswanathan 

SINGAPORE (ICIS news)--India’s current quarter polyethylene (PE) imports are estimated to have almost doubled year-on-year while consumption rose 19% amid strong domestic demand, producers and importers said on Friday.

High density PE (HDPE) imports into India during the third quarter of 2007 are estimated at 27,000 tonnes, while linear low density PE (LLDPE) imports are projected at 22,000 tonnes,” an importer said.

“However, PE imports in the fourth quarter are expected to reduce to 22,000 tonnes as demand slows after the peak festival season,” he added.

PE exports, however, fell to around 30,000 in April-August 2007, down from 70,000 tonnes in the same period last year, producers said.

 “Strong domestic demand, high freight rates and a weakening US dollar have made exports less and less attractive to local producers,” a producer said.

It has also attracted several new exporters to the Indian market in recent months.

“We currently have an estimated 29,000 tonnes of imported PE in warehouses, something we have never seen in the past year at any given time,” the importer said.

“The main demand driver has been LLDPE, consumption of which surged by 20-21% in the five months to end-August,” said the producer.

 The packaging and cable compounds have seen strong growth, fuelled by the boom in the retail and power supply sectors. Demand for HDPE, especially in the pipes and shopping bags segments, grew by 15-16% in the same period, another producer said.

PE demand for the full year to March 2008 is estimated by producers and importers to rise 14-15%, with LLDPE demand expected to grow by 17-18% and HDPE by 11-12%.

Of the total PE consumption of 1.9m tonnes in 2006-07, LLDPE constituted 650,000 tonnes, while HDPE film accounted for 250,000.

 HDPE pipe grade consumption totalled 110,000 last year, but is displaying the strongest growth among all the PE segments, said the first producer.

“Consumption of PE pipe grade, driven by the growth in telecommunications and domestic gas supply usage, is set to touch 200,000 tonnes in 2007-08, a growth of 82% from last year,” he said.

Demand for LLDPE in 2007-08 is expected to grow by 18-19% from the previous year, while that for HDPE is projected to increase by 12-13%, both producers said.

Consumption of low density PE (LDPE), however, is set to buck this trend, as it has remained flat in the period April-August 2007 at 105,000 tonnes, they said.

“The main reason for the weaker demand for LDPE compared with LLDPE and HDPE is the high price of LDPE, which has prompted converters to substitute it with LLDPE in applications such as power cable compounds,” said the first producer.

Supply of some grades of PE had been tight early this year, especially grades such as HDPE film and pipe. Other grades, such as LLDPE and HDPE yarn have seen less tightness in availability. Total supply of PE in India is current around 2m tonnes/year.

The major PE producers in India are Reliance Industries, Haldia Petrochemicals and Gail India. Major exporters include SABIC, EQUATE and Borouge.

By: Prema Viswanathan
+65 6780 4359

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