FocusIndia PE, PP June import prices fall on weak demand, crude

31 May 2011 07:06  [Source: ICIS news]

SINGAPORE (ICIS)--India’s spot polyethylene (PE) and polypropylene (PP) import prices for June have dropped by 3-5% as compared with May because of weak downstream demand and soft crude futures, market sources said on Tuesday.

Discussions for low-density PE (LDPE), linear low-density PE (LLDPE) and high-density PE (HDPE) are at $1,680-1,740/tonne (€1,176-1,218/tonne) CFR (cost & freight) India Main Port, $1,350-1,380/tonne CFR India Main Port and $1,350-1,370/tonne CFR India Main Port, respectively, according to the sources.

Raffia-grade PP discussions are at $1,640-1,670/tonne CFR India Main Port, while those for block copolymer PP are at $1,700-1,720/tonne CFR India Main Port, they said.

The persistently weak downstream demand and bearish sentiment of buyers have pressured local makers into reducing their PE and PP list prices by Indian rupees (Rs) 2/kg (4 cents/kg) and Rs3/kg, respectively, and price discussions of imports have slipped in tandem.

Demand for PP is steady, but demand for PE has been weak since the Indian Supreme Court’s ban on the use of plastic wrapping in gutka took effect on 1 March, sources said.

“The sales of non export-orientated converters is dwindling. This will weaken demand even further,” said a trader in India.

Export-orientated converters said their business is moderate, but they still prefer to procure more local material because it is more competitively priced.

“The allocation to buy more local products has increased and we are buying less imports because of the large price disparity, which varies from $50-70/tonne,” said a converter in India.

The volatility in crude futures has also weighed on polyolefin prices, sources said, adding that crude prices slipped by $10/bbl in mid-May.

“To curb the bearish sentiment that was due to the recent drop in crude futures, we have to make price adjustments. Otherwise, business will be harder,” said a producer based in the Gulf Cooperation Council (GCC).

“Whenever prices start to slip, sentiment will weaken. Converters are expecting prices to tumble further, especially since they have been on an uptrend since December 2010,” said a second GCC-based maker.

Local converters said PE and PP prices have risen by about $150/tonne and $300/tonne, respectively, in the past six months (please see graph), and they are under tremendous pressure as they are unable to pass the cost on to their customers.

“It is about time that prices come down. Otherwise, we have to shut our factories very soon,” said a local converter.

Some traders and converters said the current downtrend, which began in mid-May, is here to stay, but producers remain uncertain about the outlook.

“If demand in China improves, we may see a rebound in prices. So, we can’t see this downtrend persisting,” said a third GCC-based maker.

PE India CFR Main Port

($1 = €0.70, $1 = Rs45.09)

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By: Ong Sheau Ling
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