24 August 2012 06:04 [Source: ICIS news]
By Ong Sheau Ling
SINGAPORE (ICIS)--Huge volumes of lower-priced polyethylene (PE) cargoes – mainly low density PE (LLDPE) film and low density PE (LDPE) lamination/coating grade – that have been flowing into India since July will likely cap price gains in the country's import market, industry sources said on Friday.
About 30,000 tonnes of extra PE resins, primarily originating from Europe, were estimated to have reached ?xml:namespace>
These imported materials arriving in
On Thursday, September offers and selling ideas for LLDPE film and LDPE lamination were at $1,360-1,380/tonne CFR Mumbai and $1,450-1,470/tonne CFR Mumbai, respectively, industry sources said.
“These extra cargoes, which traders are mostly holding now, are at a low cost. This will weigh on buying ideas for new imports,” a key trader based in
These “irregular” parcels procured when the European market was lacklustre in June and July were settled at $1,240-1,280/tonne CFR Mumbai for LLDPE film, and at $1,340-1,350/tonne CFR Mumbai for LDPE lamination.
Most Indian importers said they are concerned whether the domestic market will be able to absorb the imported volumes.
“With the impending Diwali, we don’t see why demand should go down. However, this is provided that we can digest all these extra products,” a trader based in
A Mumbai-based trader echoed the same concern, saying: “It is just not clear whether we can actually consume all of these. Now, we just have to move our stocks to the converters as quickly as possible to restore our cash flow.”
A consequent offloading of stocks by traders will exert a downward pressure on import prices, market sources said.
Spot prices of LLDPE film and LDPE lamination have steadily increased between end-June to mid-August, gaining between 2.1-5.9% over the period, according to ICIS, on the back of firmer costs of upstream naphtha and feedstock ethylene.
Naphtha and ethylene prices have surged 33-37% over a two-month period to mid-August, ICIS data showed.
“Now with these cheaper [PE] cargoes lying around, traders will be busy liquidating these products first before buying any new imports. Import interest is really weak,” a Mumbai-based trader said.
“The emphasis now is to get rid of these materials to the converters so that we can regain our cash flow,” another trader based in Mumbai said.
Cash flow has been an ongoing problem in
“No one will be interested to stock up even though they agree that prices have met the bottom,” a third Mumbai-based trader said.
“Given all these bearish factors, it remains unclear whether LLDPE film and LDPE lamination prices will still firm,” a local PE producer said.
LLDPE film is commonly used in the film and packaging in the agricultural and food sectors, while LDPE lamination is used in coatings such as on flexible packaging and paper lamination.
($1 = €0.80)
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