19 December 2011 04:44 [Source: ICIS news]
By Ong Sheau Ling
In the week ended 16 December, average low density polyethylene (LDPE) film spot prices were assessed at $1,380/tonne (€1,063/tonne) CFR (cost and freight) Mumbai, down $5/tonne from the previous week; linear low density polyethylene (LLDPE) at $1,250/tonne CFR Mumbai, down $25/tonne, according to ICIS.
High-density polyethylene (HDPE) film average prices were at $1,315/tonne, down by $5/tonne from the previous week, while PP raffia average spot prices were assessed at $1,340/tonne CFR Mumbai, $25/tonne lower week on week, ICIS data showed.
A much weaker Indian rupee against the US dollar translate to much higher prices of polymer imports compared to domestic material, they said.
The rupee fell to a record low of Rs54.30 to the US dollar on 15 December, representing a more than 18% decline from the highs hit in July, on concerns about the country’s slowing economic growth, according to Reuters.
“We do not [know] what we will be paying when the cargo arrives, given the volatile [rupee] currency,” a Mumbai-based trader said.
To reduce his foreign exchange risk, the trader said he prefers to keep imports low, and concentrate more on trading domestic goods.
The sharp depreciation of the rupee prompted
Indian banks have also raised limits for opening letter of credits (LCs) to Rs54.00/kg from Rs46.00/kg. Indian players said that it meant a 20% cost increase for buyers to opens LCs for imports.
“The Indian government is trying its best to control flow of the rupee, so as to bring a stop to the depreciation of the rupee,” an Indian PE, PP producer said.
The depreciation of the rupee also prompted
“Our customers who are dependent on imports are helpless now. They do not want to risk paying more when the cargo arrives at their factories,” another Mumbai-based trader said.
But within the domestic market, demand is not robust, Indian players said.
“Next quarter’s performance is an extension of this [December]. Market will still be slow and based on the demand situation, PE and PP prices will fall,” a third Mumbai-based trader said.
On 16 December, offers for PE and PP imports were largely lower compared to the previous week. Thai low density PE (LDPE) film was offered at $1,360/tonne CFR (cost and freight) Mumbai for January shipments.
Iranian HDPE film materials were offered at $1,300/tonne CFR Mumbai for December/January shipments, while Middle East PP raffia products were offered at $1,320-1,360/tonne CFR Mumbai, they said.
($1 = Rs52.75 / $1 = €0.77)
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