FocusIndia PE, PP may gain on restocking, active China market

15 November 2011 06:23  [Source: ICIS news]

(Recasts lead for clarity)

By Ong Sheau Ling

Indian converters are eager to start discussions for December parcelsSINGAPORE (ICIS)--Polyethylene (PE) and polypropylene (PP) import prices in India are likely to increase this week on the back of an expected restocking activity, with active plastics trades in the key China market in the past two weeks providing an upward momentum on prices, industry sources said on Tuesday.

Indian converters are low on stocks and are expected to tap the spot market soon for cargoes, they said.

Buying and selling indications for various PE and PP grades heard on Monday are generally higher than discussion levels last week, which marked the end of the price decline, market players said.

“Prices have finally bottomed out. This is good news,” a trader based in Mumbai said.

Linear low density PE (LLDPE) film cargoes from Saudi Arabia were offered at $1,300-1,310/tonne (€949-956/tonne) CFR (cost & freight) Mumbai on 14 November, while high density PE (HDPE) film parcels were offered at $1,340/tonne CFR Mumbai for shipment in December, industry sources said.

A Saudi producer announced on 14 November a $20/tonne increase across all PE and PP grades for December parcels. The new offers are at $1,385/tonne CFR Mumbai for LDPE, $1,325/tonne CFR Mumbai for HDPE blow moulding and $1,395/tonne CFR Mumbai for PP raffia/injection, Mumbai-based traders said. 

On 11 November, the average weekly prices were at $1,425/tonne CFR Mumbai for LDPE film, $1,255/tonne CFR Mumbai for LLDPE film, $1,305/tonne CFR Mumbai for HDPE film and $1,385/tonne CFR Mumbai for PP raffia, according to ICIS.

The traders added that prices are likely to extend their gains for the next couple of weeks.

“Higher PE, PP prices will mean that the converters will return to the market to restock. In fact, we are now receiving enquiries from some customers, who are not regular buyers,” a Mumbai-based trader said.

Indian converters are eager to start discussions for December parcels as their inventories are far below their usual level.

“There is still resistance at such offer levels at the moment, but these offers maybe accepted later this week if the bullish sentiment continues,” said an east India-based producer.

Converters have been buying on a need-to basis. They have been keeping their stock levels low since early August, when polymer prices started falling (please see the graph below).

“Market opened this week with quite a good sentiment. We can see that from the higher [Dalian] futures prices [for LLDPE film], so, prices should overall increase this week,” said an Indian producer based in the west coast.

A major film converter based at Daman in west India, where most export-orientated converters are located, has an inventory level of barely 30 days, 60% of its regular stock level, a company source said.

“Prices will most likely increase. We have to start restocking with any cheaper cargoes available now,” he added.

Indian polymer producers are expected to increase their domestic list prices this week if polymer prices in China and southeast Asia improve further, industry sources said. The previous Indian rupees (Rs) 1.00-3.00/kg (Rs1,000-3,000/tonne, $20-60/tonne) hike in list prices for various PE and PP grades took effect on 10 November.

“Most Middle East producers will announce their offers for December cargoes later next week and we do expect higher price levels, in tandem with the firmer China market,” another Mumbai-based trader said.

In China, the average prices of polymers increased by up to $30/tonne in the week ending 11 November at $1,405/tonne CFR China for PP raffia and LDPE film, $1,210/tonne CFR China for LLDPE film, and $1,335/tonne CFR China for HDPE film, according to ICIS.

($1 = €0.73, $1 = Rs50.40)

For more pricing intelligence, visit ICIS pricing
For more on polyolefins, visit ICIS chemical intelligence
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Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Ong Sheau Ling
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