By Malini Hariharan
Yes, the Indian economy is growing and propping up demand for all polymers.
The blog had highlighted a few weeks back that polypropylene (PP) demand expanded by 13% during the April-July period and the expectations are that this rate will be maintained for the full year ending 31 March 2011.
Raffia, the biggest end-use segment for PP, has been a big driver and is projected to expand by 18-19%.
The strength in the local PP market means that India will export less PP than anticipated, said one industry source. He estimated that Indian exports were likely to hit 600,000 tonnes for 2010-11 as compared with 660,000 tonnes in 2009-10.
As for polyethylene (PE), demand (domestic sales plus imports minus exports) for linear-low density PE (lldPE) and high-density PE (hdPE) expanded by only 6% and 1% respectively during April-August.
LldPE demand was estimated at around 400,000 tonnes while hdPE was 600,000 tonnes.
But low-density PE (ldPE), demand declined by 22% to around 120,000 tonnes.
Pic source: World News
Poor availability from local producers was the main reason for the lower growth rates for PE, said industry sources. "There were production issues at many plants; local availability was tight," explained a second source.
HdPE imports rose 6% to about 180,000 tonnes while lldPE imports were 14% higher at 160,000 tonnes. LdPE imports declined 25% to 60,000 tonnes, reflecting the tight supply globally for this product.
HdPE and lldPE imports were up but traders were hesitant to import huge volumes as prices were on a downward trend from May to July, he added.
Indian ldPE demand was also affected by a widening of the price delta with lldPE which has crossed $150/tonne in the last few months.
Industry players expected a recovery in the coming months and were confident of 10% growth in hdPE and lldPE for the full year.
LdPE should also return to positive territory to post a growth of at least 4-5%, said the second source.
But a third source believed that this would be difficult as "availability is just not there globally".
Meanwhile, local supply issues have yet to be fully resolved.
Indian Oil Corp is still struggling to stabilise operations at its newly commissioned Panipat cracker and derivatives complex and has taken a 15-day shutdown from 1 October.
Reliance Industries is said to be running both lines of its swing lldPE/hdPE plant at Nagothane but at reduced rates because of feedstock issues at the cracker.
And Haldia Petrochemical's complex on the east of India also had to be shut earlier this week to fix a problem at the naphtha cracker.