07 October 2013 15:25 [Source: ICIS news]
BERLIN (ICIS)--India’s petrochemical demand is likely to remain “stable to weak” for the rest of the year amid a weak global economic environment, an industry source said on Monday.
“The Indian rupee is settled, the currency part is over,” said a major India-based petrochemical trader on the sidelines of the 47th annual European Petrochemical Association (EPCA) meeting.
The trader, who did not wish to be identified, was referring to the slide of the Indian rupee earlier this year, which saw the local currency losing more than 20% of its value against the US dollar.
General demand of petrochemicals dwindled following the rupees’ rout but things have started changing, the trader said.
“What we see is a weak demand…globally the US, China, Europe, everybody is showing weakness,” he added, explaining that he was referring to petrochemicals in general but market dynamics varied product to product.
He said the demand for different products rests on usage and hence some petrochemicals may show signs of recovery after holidays for local festivals end in India in October.
On a separate note he said India’s petrochemical trade with Pakistan has started but not achieved its full potential yet.
Pakistan’s polyolefins demand, estimated at around 300,000 tonnes/year for polyethylene (PE) and 300,000 tonnes/year for polypropylene (PP), is entirely met by imports, mainly from the Middle East, as Pakistan has no local production of PE and PP, according to industry estimates.
However, India can meet a substantial part of this demand, industry sources say.
Overall direct bilateral trade between India and Pakistan grew 21% to $2.4bn (€1.78bn) from April 2012 to March this year, according to figures released by the Indian government earlier this year.
According to media reports, the trade could soar to $6bn in the next two years if both countries decide to treat each other equally. Currently, most of the trade between India and Pakistan takes place via Dubai and its volume is estimated at over $4bn.
A substantial part of this trade can be petrochemicals, the trader said.
Pakistan, with a population hovering around 180m but without major petrochemical manufacturing facilities, is seen as a big market by Indian petrochemical players.
“We should see greater amount of products flowing,” he said, adding: “Eventually it [bilateral trade] will fall into place.”
The annual EPCA meeting runs from 5-9 October.
($1 = €0.74)
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