FocusReliance imports PE to meet shortfall

27 November 2007 07:49  [Source: ICIS news]

By Prema Viswanathan

 

SINGAPORE (ICIS news)--Indian petrochemicals major Reliance Industries has taken delivery of its first polyethylene (PE) cargo at Chennai port to meet a shortfall in domestic supply, sources close to the company said on Tuesday.

 

“The 1,000 tonne high density (HDPE) film cargo was booked in September but has just arrived,” one of the sources said.  However, the company was studying the market before it took a decision on importing more cargoes from other Asian suppliers, the source added.

 

“In September, the HDPE film market was facing severe supply constraints, as domestic suppliers had begun to switch production from film grade to pipe grade, demand for which was greater at the time,” the source said.

 

 But in October, supply of HDPE film in the Indian market was abundant, as imports almost doubled, causing prices to fall.  

 

The dampening sentiment and abundant supply has prompted a second major Indian PE producer, Haldia Petrochemicals, to slow its PE imports in the past month, a source close to Haldia said.

 

“The company had been importing close to 6,000 tonnes of PE every month from August until October. However, since October, Haldia has not booked any imports in the past month as it is not sure about the future supply and demand balance in the country,” the source said.

 

The impending start-up of Gail India’s new HDPE plant in Pata, Uttar Pradesh, in early December had also intensified fears of possible oversupply in the coming months, the source added.

  

“I think both Reliance and Haldia will study the impact of the new plant on the Indian market before booking fresh cargoes from Asian suppliers,” the source said.

 

Meanwhile, traders who have been active in the import market are concerned about the forays by Reliance and Haldia to capture an increasing share.

 

“With Reliance also entering the import market and attempting to increase its market share in southern India, traders face an uphill task in holding onto their customers in the PE segment,” said a trader.

 

Indian importers have been improving their margins in the past week, as HDPE film prices into have surged on the back of tightening supply and record high crude values. HDPE film deals were heard at $1,520/tonne CFR (cost and freight) India, up $40/tonne from a week earlier.

 

However, suppliers and traders said they were uncertain about the future direction of supply and prices and this was contributing to the indecision among Indian producers over strengthening their import positions.


By: Prema Viswanathan
+65 6780 4359



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