04 May 2010 07:15 [Source: ICIS news]
SINGAPORE (ICIS news)--Polypropylene (PP) prices have risen by up to $40/tonne (€30/tonne) in the Middle East and by up to $30/tonne in India in the past week on supply constraints and the trend is likely to continue until June, industry sources said on Tuesday.
The trend was expected to reverse in the second half of 2010, as new plants in the two regions ramp up production, they added.
Persistently high upstream crude values and relatively stable propylene costs lent additional support to the bullish mood in PP markets, traders said.
Suppliers and buyers reported transactions for May parcels of raffia and film grade PP on Monday at $1,400/tonne CFR (cost and freight) and $1,420/tonne CFR respectively in the East Mediterranean (East Med) region, $40/tonne higher than discussions a week earlier.
In India, an end user said he had purchased a raffia grade parcel from a global supplier at $1,400/tonne CFR India, $30/tonne higher than purchases made a week earlier.
Availability was severely restricted in the Middle East and South Asia due to a spate of planned and unplanned shutdowns, traders said. In the Middle East, Al Waha Petrochemical's PP plant in Saudi Arabia restarted after a two-week outage only late last week while Advanced Petrochemical's PP facility, also in Saudi Arabia, resumed full output only in early April.
In India, Reliance Industries' PP plant at Nagothane is expected to restart this week after an 18-day shutdown, while the company’s PP unit at Hazira resumed full production after a turnaround only in late April.
India’s supply constraints were expected to ease only in late May, when product from Indian Oil Corp's new PP plant hits the market, a trader said.
Production cuts at PP plants in the US and Europe in April due to propylene shortages and low margins had exacerbated the supply woes in the Middle East and South Asia, although the situation was likely to improve in May, buyers said.
Asian propylene markets also showed signs of softening last Friday, although suppliers were unwilling to offload cargoes at below $1,300/tonne CFR northeast Asia, according to ICIS pricing data. Crude values were above $85/bbl at noon on Tuesday, bolstering sentiment in PP markets.
Robust demand was an additional factor boosting PP prices in India. India’s demand for PP is expected to grow year-on-year at 12-15% in the financial year 2010-11, according to producers. Demand for raffia has been bolstered by the shortage of natural fibre such as jute for packaging of food grains, fertilisers and cement.
Key PP producers in the Middle East and India include Saudi Basic Industries Corp (SABIC), Al Waha Petrochemical, Reliance Industries and Haldia Petrochemicals Ltd.
Copolymer PP goes into automobiles, household appliances such as washing machines and consumer electronics applications such as television sets while raffia grade PP is used for packaging of food grains, fertilisers, cement and under-lay for carpets.
($1 = €0.76)
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections