05 July 2012 06:34 [Source: ICIS news]
By Ong Sheau Ling
Sentiment has turned upbeat and polymers values are likely to be supported by recent spikes in raw material prices, they said.
Buying ideas for PE, PP imports were up by an average of $20/tonne (€16/tonne) from last week’s transaction levels, Indian traders and converters said.
For low density PE (LDPE) film, buying ideas were at $1,280-1,320/tonne CFR (cost & freight) Mumbai, while for linear low density PE (LLDPE) film, buyers are quoting $1,320-1,350/tonne CFR Mumbai, and for PP raffia. Buying ideas for high density PE (HDPE) film and PP raffia were at $1,280-1,300/tonne CFR Mumbai, traders said.
Most overseas PE and PP producers have sold out their July allocations last week, while others withdrew their offers for the remainder of July cargoes, when crude futures and naphtha prices surged on 29 June, anticipating price increases, Indian traders said.
“Even if there are no offers in the market now, importers are seeking new cargoes because the rupee has appreciated,” another trader based in Mumbai said.
The Indian rupee has appreciated and is currently trading at above Rs54 against the US dollar, down from more than Rs57 levels in the last week of June. A stronger currency is a bane for exports but makes the cost of imports lower, as buyers will need to shell out less rupees for the dollar-denominated transaction.
Prevailing low inventories and limited import arrivals over the past two months have prompted importers to restock on PE and PP, India-based traders said.
“Lack of domestic LDPE film and LLDPE film supplies curtail the already tight market,” a key trader based in
A major trader based in
India's domestic LLDPE supply has been low in June because of low production at facilities amid a shortage of feedstock butene-1.
Meanwhile, strong crude and naphtha prices were also buoying up sentiment in the
“Buyers started to look for material when crude started to show signs of recovery,” a Mumbai-based trader said.
Crude futures prices surged on 29 June following a breakthrough agreement among European leaders to address the eurozone debt crisis.
In the week ended 29 June, average spot LDPE film prices were assessed at $1,260/tonne CFR Mumbai; LLDPE film prices were at $1,280/tonne CFR Mumbai; HDPE film prices were at $1,285/tonne CFR Mumbai, and; PP raffia prices were at $1,290/tonne CFR Mumbai, according to ICIS.
Most PE and PP grades in
“Perhaps local makers will [also] increase PE list prices since buying momentum is there,” a third Mumbai-based trader said.
“We are very happy that our customers are buying,” he added.
Most PE and PP importers have been incurring losses over the last three months because of the wild fluctuations of the Indian rupee against the US dollar this year, local traders and converters said.
“Even if this is a short-lived uplift in prices, it is the first good news in three months,” another trader based in Mumbai said.
Some players are concerned that the recovery in market sentiment may be temporary as the onset of the monsoon season is expected to weigh on fundamental demand.
“With the rains, demand will certainly be affected. But processors only have one-and-a-half to two months to go before Diwali [holiday], so they will to start stocking up for production,” the same trader said.
The Indian Diwali – festival of lights – will begin in early November.
($1 = Rs54.24 / $1 = €0.80)
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