FocusIndia's PE, PP prices to firm on Al-Jubail plant outages

20 January 2012 09:14  [Source: ICIS news]

By Ong Sheau Ling

SINGAPORE (ICIS)--Higher import prices in India for polyethylene (PE) and polypropylene (PP) are likely to emerge next week, following a widespread outage of PE and PP facilities at the Al-Jubail Industrial Park in Saudi Arabia, industry sources said on Friday.

Price sentiment was immediately lifted after news of the plant outages reached India late on Thursday night, they added.

Cargoes originating from Saudi Arabia account for the bulk of the PE and PP imports to India, market sources said.

“We started to hear unaffected producers reducing their offer validity period from this morning and they have the intention to raise prices starting from Monday,” a Mumbai-based trader said.

A Saudi producer, which shut down its PE, PP facilities in Al-Jubail, withdrew all its offers for the following grades – low density polyethylene (LDPE) film, high density polyethylene (HDPE) film, polypropylene (PP) raffia and isotatic PP (IPP) film – late on 19 January, following the power outages.

Market players expect the prices of the LLDPE, HDPE and PP grades to be most heavily affected, as most of such imports to India originate from Al-Jubail.

“If the outage is to exceed more than a week, the production loss at Al-Jubail will be significant enough to trigger an up-stir in prices,” a source close to Reliance Industries Ltd (RIL) said.

“Particularly for LLDPE film, the domestic market is already tight. If LLDPE supply from Al-Jubail for February shipments is going to be affected significantly, prices will spike,” another source close to RIL said.

LLDPE supply in the Indian domestic market has been tight since last December because of outages and poor operating rates at Haldia Petrochemicals and Indian Oil.

“There is a high possibility that LLDPE film prices will cross $1,300/tonne [€1,001/tonne] CFR [cost & freight] India Main Port next week, looking at the current circumstances,” another trader based in Mumbai said.

Likewise, players expect PP prices to continue rising consequently, alongside other bullish factors such as expected reduced operating rates at RIL and high upstream propylene costs.

“Offers from next Monday will be higher for all PE and PP [cargoes]. No doubt about that,” a trader based in south India said.

For the week ended 19 January, Middle East cargoes were sold at $1,330-1,340/tonne CFR Mumbai for LDPE film, $1,280-1300/tonne CFR Mumbai for LLDPE film, $1,330/tonne CFR Mumbai for HDPE film and $1,300-1,330/tonne CFR Mumbai for PP raffia for February shipments, industry sources said.

On 20 January, offers for cargoes originating from non-Al-Jubail Middle East plants were at $1,330-1,340/tonne CFR Mumbai for PP raffia.

($1 = €0.77)

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By: Ong Sheau Ling
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