13 January 2009 05:35 [Source: ICIS news]
By Prema Viswanathan
SINGAPORE (ICIS news)--Indian polymers except for polystyrene (PS) have surged by as much as 12% in the past month largely due to production cuts that limited supply to the market, but the gains may not be sustained in the second quarter, industry sources said on Tuesday.
Low inventories coupled with restricted availability allowed polyethylene (PE) and polypropylene (PP) to gain about $90/tonne (€67.50/tonne) last Friday to $800-950/tonne CFR (cost and freight) ?xml:namespace>
Over the same period, polyvinyl chloride (PVC) also inched up $40/tonne to $670-690/tonne CFR India, while PS fell by up to $80/tonne to $720-880/tonne CFR India, according to global chemical market intelligence service ICIS pricing.
PS prices have been on a downtrend amid adequate availability and weak demand.
“With crude prices falling and the economic outlook worsening by the day in
“It would be unwise for polymer suppliers to be too bullish,” he said.
Taking into account the weakness in vital sectors of the economy, some Indian producers were wary about being too bullish on the polymers market.
“Currently, we are seeing good demand for PP, PE and PVC from the agriculture and food packaging segments. But the construction and automotive segments, which have been major drivers of demand in the past, are now at a low ebb. This is a cause for concern,” said a polymer producer.
Tight supply and low inventories among end users have been major factors behind the recent price surge, said a polymer converter.
“Most suppliers of PP, for instance, say they have exhausted their allocations for January and are only willing to offer for February. Converters’ stocks, on the other hand, are quite low, as we have been buying only limited volumes in past months, in anticipation of lower prices,” the converter said.
Supply has been restricted mainly due to plant outages and production cuts in Asia and the
An expected easing of the tight supply could dampen market sentiment, especially for PE and PP, said a second polymer trader.
“There are several new PE and PP plants due to start up in the next few months in the
An end to the nation-wide truckers’ strike, which has resulted in a supply bottleneck for both polymers and plastic goods, would also accelerate deliveries and ease supply, said a second polymer converter.
($1 = €0.75)
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