FocusIndia flexible polyol prices at record high on short supply

24 February 2011 12:01  [Source: ICIS news]

By Ong Sheau Ling

SINGAPORE (ICIS)--India flexible polyether polyols slabstocks hit a record high early this week on the back of tight import availability and higher domestic prices, a trend likely to continue in March and April, industry sources said on Thursday.

India prices were discussed at $2,350-2,450/tonne (€1,716-1,789/tonne) CFR (cost & freight), an increase of 8% from the beginning of February or 30% from last July, when prices started on the uptrend. The previous high was in the $2,300s/tonne in August 2008.

Short supply was the primary factor that boosted prices, market players said. They added that recent shortages in supply of upstream propylene oxide (PO) and ethylene oxide (EO) capped operating rates of polyols units in Asia.

The India market trailed the bull run in the key China market. Local polyols maker Manali Petrochemical adjusted offers on 16 February, the first time in history it had revised offers in the middle of the month.

Manali announced an Indian rupee (Rs) 5/kg (11 cents/kg) increase to Rs112/kg and Rs115/kg EXW (ex-works) for bulk and drummed material, respectively. The drummed price was equivalent to the low $2,300s/tonne on a CFR basis.

Key exporters to India, Shell Chemical and Dow Chemical, were heard to have low stock levels at Khandla port despite strong buying interest, local foamers and traders said. Both makers were offering Rs115/kg EXW for remaining bulk cargoes.

“Unless more volumes from Shell come in, we will continue to face shortages in March,” a Mumbai-based foamer said.

Shell was heard to be running its 45,000 tonne/year polyether polyols facility on Pulau Bukom at reduced rates, as its upstream 800,000 tonne/year cracker at the same site in Singapore was shut for a turnaround that would last three weeks from 20 February, market players said.

Meanwhile, US giant Dow Chemical was heard to have cut allocations to India, while catering only to key customers due to persistently high propylene and PO costs.

Amid such limited imports, regional traders took opportunities to sell products from Japan, South Korea and European countries to India.

Small parcels of South Korean material (originating from SKC and KPX Chemical), subject to anti-dumping duties, were booked at $2,400-2,500/tonne CFR India.

The largest polyether polyols maker in South Korea, SKC Chemical, was heard to be running its facilities at reduced rates of 90-95% due to a lack of EO and PO. Short EO supply was due to impending turnarounds of EO units in South Korea in the second quarter, market players said.

South Korea’s KPX Chemical was heard to have sold out for March and nearly half of April because of the extremely strong demand.

“Everyone is looking for cargoes, even other producers are asking us whether we could spare some quantities for them,” a company source at KPX Chemical said.

Traders offered a few containers of Japanese cargoes at $2,400/tonne CFR India late last week/early this week, and these were immediately snapped up by small to medium-sized foamers.

“Our customers are still hungry for more, particularly those small and medium-sized ones who can’t get material from Shell or Dow, but we can’t offer more because we are tight as well,” a Japanese trader said.

Producers indicated higher prices for at least the next two months to illustrate their short positions.

“The price now is really hysterical and not [having] enough raw material is starting to affect our sales,” a foamer based in New Delhi said.

Flexible polyether polyols slabstocks, together with toluene di-isocyanate (TDI), are raw materials for flexible foams, which are used in the manufacture of bedding, furniture and automobiles.

($1 = Rs45.32, $1 = €0.73)

For more information on flexible polyether polyols slabstocks, visit ICIS chemical intelligence
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Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Ong Sheau Ling
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