Tight supply of Iranian HDPE keeps south Asia markets bullish

05 August 2011 05:29  [Source: ICIS news]

South Asian prices of HDPE are expected to increase further because of a shortage in Iranian imports, industry players SINGAPORE (ICIS)--South Asian prices of high density polyethylene (HDPE) are expected to increase further because of a shortage in Iranian imports, industry players said on Friday.

The number of Iranian exports into south Asian countries, such as India and Pakistan, has decreased as a result of a lucrative domestic HDPE pipe market in Iran and strong Chinese HDPE film prices, the players said.

Two Iranian companies are producing pipe grade material, while four others are producing film grade material until 20 August (please see table below) to meet the firming demand.

“Looking at the short Iranian supply, we are certain that [prices for] September will be higher,” a Karachi-based trader said.

On 5 August, prices of HDPE film were discussed at $1,450/tonne (€1,030/tonne) CFR (cost & freight) Karachi and $1,450-1,470/tonne CFR Mumbai, market sources said.

The supply of Iranian HDPE film into India has been low since the beginning of this year and this is expected to worsen as Iranian suppliers continue to reduce their allocations to the Indian market amid more attractive markets in China and southeast Asia, Indian market players said.

Average weekly HDPE film prices in China and southeast Asia were at $1,395/tonne CFR and $1,410/tonne CFR respectively on 29 July, according to data from ICIS.

As a result, imports of the material from these regions for August were immediately wiped out last week.

There were few fresh offers for shipments in August this week as both southeast Asian and Middle Eastern producers have mostly sold out for the month.

The tight availability of HDPE film from Middle East producers has also contributed to the bullish market, the market sources said.

Supply from the Middle East is short because producers in the region have reduced their operating rates as a result of a water and gas shortage, and additional allocations to China, the sources added.

Prices of HDPE film are expected to be at $1,500/tonne CFR Karachi/Mumbai by the end of August for shipments in September, according to buyers based in south Asia and producers based in the Middle East and southeast Asia.

Some market players said they are they are not expecting prices to increase further because of the sharp declines in crude futures and US equities during overnight trade, which were caused by fears of an impending double-dip recession.

Production status of HDPE plants in Iran

HDPE film prices in Asia in July 2011

($1 = €0.71)

For more on high density polyethylene, visit ICIS chemical intelligence
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By: Ong Sheau Ling
+65 6780 4359

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