FocusIndia’s PP imports shrink 37% in April-July, demand up 13%

19 August 2010 08:27  [Source: ICIS news]

By Prema Viswanathan

SINGAPORE (ICIS)--India’s imports of polypropylene (PP) in April-July shrunk by 37% year on year, a trend likely to continue in the months ahead, even though demand during the period grew by 13%, industry sources said on Thursday.

India's PP imports fell to 114,000 tonnes in April-July, down from 182,000 tonnes in the same period last year, while demand totalled 809,000 tonnes.

“The main deterrent against imports has been the imposition of provisional antidumping duties (ADDs) against suppliers from Saudi Arabia, Singapore and Oman in July 2009,” said a source close to one of the affected suppliers.

Imports could see a further decline if the Indian government imposes final ADDs on cargoes from these countries by 23 August, the deadline set by the government for the announcement of these duties, said another source.

The current supply constraints could intensify if the government imposes ADDs on PP imports from South Korea, Taiwan and the US. An investigation is already under way and is set to conclude by the end of this year, market sources said.

Sources close to Indian producers, however, said that the ADD was not the major factor behind the import decline.

“The main reason for falling imports is plentiful local supply and the benchmarking of local prices in parity with imports for the re-exporting segment,” said a source close to one of the local producers.

However, exporters to India, as well as converters, disagreed, pointing to the squeeze in local supply due to a spate of production problems and the diversion of domestic cargoes to key export markets, such as China.

“Availability of PP has been very limited in the past few months locally as well as globally, so those of us who were maintaining low inventories, waiting for prices to bottom, found ourselves scrambling for cargoes,” said a PP processor.

Prices had been falling since late May but bottomed in late July, surging by more than $100/tonne (€78/tonne) in the past two weeks to $1,270-1,330/tonne CFR (cost and freight) India for raffia and injection grades on 13 August, ICIS data showed.

Converters also disagreed with Indian producers’ contention that local offers were at parity with import prices for the re-export segment.

“Local prices have been at a premium of at least $50/tonne over import prices. But even so, availability is restricted,” said a converter who exports PP raffia bags to the US and Europe.

Indian producers hiked prices three times in as many weeks to Rupees (Rs) 76-80/kg ($1,636-1,722/tonne) EXW (ex-works) last week.

Although Reliance Industries brought on stream a 900,000 tonne/year PP plant last June at Jamnagar, in Gujarat state, intermittent outages and an increase in exports kept supply snug in the domestic market for most of this year, prompting end-users to look for imported cargoes.

The sharp increase in demand for PP, especially from the foodgrain packaging and automotive segments, has intensified the supply squeeze, said end-users.

“The raffia segment alone has seen an 18% increase in consumption, especially in the foodgrain packaging segment,” said another source close to a producer.

The state-owned Food Corporation of India has lately put out a slew of tenders seeking raffia PP cargoes, a change from the bias towards natural fibre observed in the past, said a source close to a Saudi Arabia-based exporter.

The spectacular growth in India’s automotive segment had also spurred an increase in demand for copolymer PP, he said.

“Demand for copolymer PP is estimated at 250,000-300,000 tonnes/year currently, up 20% from last year,” he said.

($1 = €0.78/$1=Rs46.46)

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By: Prema Viswanathan
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