Indian producers hike PE prices again by 5%

08 January 2009 11:12  [Source: ICIS news]

SINGAPORE (ICIS news)--Indian producers have hiked polyethylene (PE) prices by 5% for the second time in January, citing higher feedstock costs and limited supply, local industry sources said on Thursday.

Prices of PE were hiked by rupees (Rs) 3/kg ($0.06/kg) to Rs62-65/kg ex-works (EXW).

“Naphtha costs have risen by 5% in the past week and crude has also stabilised, putting pressure on producers' margins,” a producer said.

The PE price increase comes on the heels of a similar hike last week.

Converters said they were finding it hard to digest the price increase.

“We are facing increasing margins pressure due to high PE costs, but are forced to accept the price increases as imported cargoes are hard to find,” said a converter.

Supply constraints persisted despite the normalisation of production at local plants, which were running at reduced capacity late last year, traders said.

“Local as well as overseas suppliers seem to be holding back on supply, even as customers rush to build up inventories,” said a trader.

“Buyers who were subsisting on hand-to-mouth inventories are now keen on stocking up, on the perception that prices have bottomed.”

Another trader said that imported cargoes booked in November had been delayed, causing customers to turn to domestic suppliers. However, this could not be confirmed.

Demand for PE from the agricultural film and food packaging segments was relatively strong, the converter said.

Major PE producers in India include Reliance Industries, Haldia Petrochemicals and Gail India.

($1 = Rs48.75)

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By: Prema Viswanathan
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