16 September 2011 07:34 [Source: ICIS news]
By Ong Sheau Ling
SINGAPORE (ICIS)--The high inventories of Iranian low density polyethylene (LDPE) film at warehouses in Iran, China, Europe and south Asia are expected to weigh on prices for shipments to south Asia over the next month, market players said on Friday.
Discussions for Iranian LDPE film cargoes were at $1,500-1,550/tonne (€1,080-1,116/tonne) CFR (cost & freight) south Asia, while negotiations for non-Iranian material were at $1,550-1,615/tonne CFR south Asia this week.
Lacklustre demand in Europe and China has resulted in the accumulation of warehouse stocks. Fresh exports from Iran’s main port have slowed, but Iranian LDPE units are still running at normal rates.
“The warehouses are full of LDPE film at Iranian ports. And offers for fresh material are decreasing day by day,” a Karachi-based trader said.
He added that a total of about 10,000-20,000 tonnes of Iranian cargoes are being held up in warehouses in Europe.
Chinese market players said large quantities of Iranian products are expected to arrive in China at the end of September. A significant amount has not been sold and will be stored in local ex-bonded warehouses.
“In September, there is much less Iranian material dispatched to Europe because of the oversupply situation there, so we have to divert products to Asia,” a key Iranian supplier said.
However, Iranian suppliers’ attempt to offload more cargoes in Asia, including south Asia and China, was not welcomed by importers and converters.
“Demand here is not good and most converters are still buying on a need-to basis. They will not try to buy early for October, in view of a further price slip,” a Mumbai-based trader said.
He added that recent depreciation of the local rupee currency has dampened the interest to import.
“Every day, we receive offers of Iranian material and because of the poor conditions in Europe, we receive offers for European material as well. There is material everywhere,” a Mumbai-based converter said.
Offers for Iranian parcels to India were at $1,550-1,560/tonne CFR Nhava Sheva port, against buying ideas capped at $1,500/tonne CFR Nhava Sheva
A European trader offered European lots to India at $1,550/tonne CFR Nhava Sheva port, but there were no takers.
Local traders received offers from a Thai producer at $1,600/tonne CFR Nhava Sheva port, LC (letter of credit) at sight.
A leading LDPE film producer based in the Gulf Cooperation Council (GCC) offered October shipments at $1,600-1,615/tonne CFR Nhava Sheva port/Karachi, LC 90 days, but this was met with little buying interest.
Pakistani converters are not keen to procure fresh parcels on the back of high inventories and tepid demand.
A local trader dealt sporadic Iranian cargoes at $1,520/tonne CFR Karachi, LC 60 days.
Market players expect high inventories to weigh on shipments to south Asia, at least until mid-October ahead of the Diwali festival.
“We can imagine the amount of LDPE film available for October shipment. Prices definitely have to come down,” another Mumbai-based trader said.
The upside on prices will remain limited for the rest of the year as seasonal demand from the greenhouse film sector and the festive period will end in October.
($1 = €0.72)
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