FocusIndia PE offers to rise on plant shutdowns, rupee rebound

12 September 2013 09:30  [Source: ICIS news]

By Felicia Loo and Belinda Salim

OPal is seeking investors for its $4.2bn projectSINGAPORE (ICIS)--Polyethylene (PE) offers to Indian are expected to rise, as regional supply will tighten owing to plant shutdowns, and amid the rupee’s rebound against the US dollar, market participants said on Thursday.

Lower import volume also underpins prices, with major PE facilities in southeast Asia currently shut, they said.

“There will be lesser offers in the market because of the shutdowns,” said one trader.

Offers for low density PE (LDPE) film have risen by $50-60/tonne (€38-45/tonne) from the previous week to around $1,580-1,590/tonne CFR (cost and freight) Mumbai basis. For linear low density PE (LLDPE) film, offers were heard at $1,490-1,500/tonne CFR Mumbai, up by $10-20/tonne from the previous week, market players said.

“The international prices are rising and China is buying [more PE],” said another market participant.

PE prices in China and southeast Asia rose in the week ended 6 September,  with LDPE film up $15-25/tonne week on week to $1,530-1,575/tonne CFR China and LLDPE film rising $20/tonne to $1,460-1,485/tonne CFR China, ICIS data showed.

Import prices rose sharply in southeast Asia, with LDPE registering the steepest increase of up to $80/tonne, as two major facilities in the region are currently off line.

PTT Global Chemical’s (PGC) 300,000 tonne/year LDPE plant in Thailand has been down since early July, while Petlin’s 255,000 tonne/year plant in Malaysia is down for at least month-long turnaround from early September, raising concerns of a severe supply crunch in the region.

On signs of firming Indian market, a deal was brokered for LLDPE film at $1,500-1,525/tonne CFR Mumbai for September, with material originating from the Middle East, market players said.

Another deal for a Middle Eastern supply for September shipment was done at $1,470-1,480/tonne CFR Mumbai, they said.

On 6 September, LLDPE prices were assessed stable at $1,450-1,480/tonne CFR Mumbai, according to ICIS.

Meanwhile, the recent appreciation of the Indian rupee will likely prompt Indian converters to actively tap the import market for PE supply, given expectations of tightening supply available in the region going forward, market players said.

On Thursday, the Indian rupee is trading at above Rs63 to the US dollar, after hitting an all-time low of nearly Rs69 in late August.

In Singapore, ExxonMobil’s 900,000 tonne/year cracker at Jurong Island is expected to be shut for turnaround this month, with the shutdown lasting from mid-September to mid-October. A spokesperson said it was not the company’s practice to discuss the operational details of its facilities.

ExxonMobil runs a second 1m tonne/year cracker at the same site, which was started up in May this year.

In Thailand, Siam Cement Group (SCG) plans to cut production at its PE and polypropylene (PP) plants at Map Ta Phut in November because of feedstock constraints, industry sources said on 6 September.

Map Ta Phut Olefins Co (MOC) is on track to shut its 900,000 tonne/year naphtha cracker in Thailand in mid-November for turnaround, a company source had said.

The cracker is expected to be off line until the end of December and derivative PE and PP units at the site are also expected to be off line for maintenance during this period.

Meanwhile, supply from Iran will further be constricted, with major producer Jam Petrochemical planning to shut down its 300,000 tonne/year high density PE (HDPE) unit and its 300,000 tonne/year HDPE/LLDPE swing unit on 10 October.

($1 = €0.75 / $1 = Rs63.4)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Felicia Loo & Belinda Salim
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