FocusIndia PP import prices expected to rise further

01 August 2011 10:27  [Source: ICIS news]

SINGAPORE (ICIS)--Indian producers and traders are confident that polypropylene (PP) prices will continue to rise in August after a 10% price jump in July, as supply remains tight on the back of poor operating rates and unplanned shutdowns of both local and Middle East-based PP facilities, industry sources said on Monday.

On 29 July, Middle East PP raffia cargoes were sealed at $1,580–1,600/tonne CFR (cost and freight) Mumbai – a 10% price increase from early July, when the uptrend began.

Converters have no choice but to increase their buying ideas in order to secure material. Middle East producers have reduced allocations to India because of plant issues and a firmer China and southeast Asian market (see graph below).

Of the three local producers, only Reliance Industries is running its PP facilities at high rates. Three PP plants in the Middle East are either operating at reduced rates or are shut because of technical problems (see table below).

Forthcoming planned shutdowns at PP units in China and a fire at the Formosa refinery in Taiwan last week lifted market sentiment further.

“Even the local producers have raised their list prices last weekend. All factors are pointing to a better market,” a Mumbai-based trader said.

The Indian makers raised their list prices on 30 July by Indian rupees (Rs) 3/kg (Rs3,000/tonne, $68/tonne) to Rs88.00–89.50/kg DEL (delivered), inclusive of 10.3% excise duty. The new import parity prices subsequently rose to the low $1,600s/tonne CFR Mumbai.

Local converters are still eager to procure more quantities as their inventories remain low ahead of the traditional peak season before the Hindi Diwali festival in October. However, several Middle Eastern producers quoted sold out allocations after last week’s sales.

Buying ideas now stand at $1,600/tonne CFR Mumbai.

“Although demand has not fully recovered as the monsoon is still ongoing, we are still in need to restock because the suppliers have cut their allocations,” said a converter based in Mumbai.

Demand for non-woven bags for cement and agricultural packaging is expected to pick up in the near term, as the monsoon season is likely to end in the second half of August or early September.

“We have to get the bags ready. Once monsoon ends, we have to get the cement and the harvest packed,” a PP converter said.

Revised offers emerged late last week at $1,675–1,690/tonne CFR Mumbai for August shipments by a Middle Eastern producer, whose PP unit is shut down, after it sold sporadic quantities at $1,550–1,560/tonne CFR Mumbai early last week.

“Such offers will be more common in the coming few weeks as propylene and naphtha prices are on the hike as well, due to the Formosa news,” a Mumbai-based trader said.

On 1 August, propylene prices were being discussed in the high $1,500s/tonne CFR NE Asia and naphtha prices at $1,006– 1,009/tonne CFR Japan.

Company

Location

Nameplate capacity (t/y)

Operating Status

Indian Oil

Panipat, India

600,000

Less than 50% since early July 

Haldia Petrochemical Ltd (HPL)

Haldia, India

340,000

 

Shut on 20 July

Restart in second week of August

Al-Waha Petrochemical

Al-Jubail, Saudi Arabia

450,000

 

Shut in mid July

Restart in August (no specific restart date)

National Petrochemical Industrial (NATPET)

Yanbu, Saudi Arabia

400,000

Reduced rates since 1 July

 

PetroRabigh

Rabigh, Saudi Arabia

700,000

Ramping up operations from 31 July

 

($1 = Rs44.21)

For more on PP visit ICIS chemical intelligence


By: Ong Sheau Ling
+65 6780 4359



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