16 February 2009 06:02 [Source: ICIS news]
By Prema Viswanathan
SINGAPORE (ICIS news)--India’s demand for polyethylene (PE) and polypropylene (PP) may just grow 3-4% in the fiscal year ending March 2009, down from the double-digit pace seen in the past two years largely due to weak buying sentiment over a four-month period starting July 2008, sources close to local producers said on Monday.
The projection does not take into consideration inventories held by end-users at the start of the current fiscal year, one of the sources said.
Consumption of polymers was flat-to-negative in the four months to mid-November, as prices fell to five-year lows, on the back of the global economic downturn, prompting buyers to delay purchases.
“We maintained very low inventories and bought very little PP for close to four months last year, as we were unsure when prices would bottom,” said a PP converter.
Buying activity resumed in mid-November, when prices began to edge up, as buyers and sellers acknowledged that prices had plunged to unsustainable levels, having lost 65-70% of their value in the space of four months.
From April 2008 to January 2009, total PP consumption in ?xml:namespace>
“The reason PE has held up better than PP is because the agricultural sector, a strong demand driver for PE, has been fairly robust,” the source said.
“Also, PE has not been affected by the slump in the automotive sector, which has severely dented PP demand,” he said.
The stability seen in the packaging segment, especially in food packaging, will help both PE and PP demand to pick up in the coming months, said the first source. “The substitution of natural fibre with PP is gaining ground lately, helping to boost PP demand,” he said.
The mushrooming of supermarkets in Indian cities is also expected to help drive PE and PP film consumption, said a third producer. “The demand for good packaging to keep food fresh and prevent wastage is on the rise,” said a third source.
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