FocusIndia converters shun PE/PP imports on ample stocks, port woes

02 September 2011 07:03  [Source: ICIS news]

India converters shun PE/PP imports on ample stocks, port woesBy Ong Sheau Ling

SINGAPORE (ICIS)--Indian converters are refraining from buying imported polyethylene (PE) and polypropylene (PP) given ample domestic supply, and amid congestions at ports that are delaying shipments of polyolefins into the country from abroad, industry sources said on Friday.

This will likely keep prices of polymer imports in India stable to soft in the near term, they said.

Discussion levels for September PE and PP parcels slipped by as much as $10/tonne (€7/tonne) from last week, and down by $40-80/tonne or 2.5-4.4% from early August, market sources said.

“Looking at the current and forward month supply-demand fundamentals, achiev[ing] price stability may not be as easy after all,” a large-sized Mumbai-based converter said.

Indian converters have not been importing as much raw materials as they used to, partly because of adequate domestic supply.

Concerns about possible delays in shipments, arising from port congestions in Dammam port in Saudi Arabia and the slow process of clearing the cargoes through customs at the Nhava Sheva port, West India, also serve to discourage buying of imported cargoes, Indian market players said.

Some overseas producers have reduced their offers for September PE and PP cargoes this week, after failing to conclude deals over the past two weeks, local traders and converters said.

A few Middle Eastern cargoes for high density polyethylene (HDPE) were transacted at $1,380-1,385/tonne CFR (cost and freight) Mumbai), down by about $30/tonne from the original offers last week, market sources said.

For low density PE (LDPE) film cargoes for September, offers from Iran and Saudi Arabia were reduced by $10/tonne this week to $1,590-1,610/tonne CFR Mumbai, they said.

Offers to India for sporadic September Middle East PP raffia products are largely at $1,570/tonne CFR Mumbai, down by as much as $20/tonne from last week.

A Saudi major and a global major, however, are holding firm to their September offers for linear low density PE (LLDPE) film and HDPE film at $1,440/tonne CFR Mumbai, citing firm crude prices.

A local distributor in India for Middle East PE products said that demand for the film sector [for food and detergent packaging] in India is doing okay.

“We don’t foresee further price declines for the PE film grades,” he said.

Some market players are hoping that demand will improve soon.

“Demand for non-woven sacks in cement and agriculture packaging should pick up after the monsoon ends in September. So, converters have to slowly stock up now [for PP raffia],” said a Mumbai-based trader.

Domestic polymer producers in India have kept their list prices for PE and PP unchanged, despite declines in spot values, pinning their hopes on better demand going forward, market sources said.

Local converters, however, doubt a strong recovery in demand given expectations of monetary policy tightening in India, while demand for exports is likely to be weak given continued fragility in economic conditions the US and Europe.

India PE, PP spot prices

($1 = €0.70)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Ong Sheau Ling
+65 6780 4359

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