Indian HDPE demand weak on domestic oversupply

23 September 2016 08:24 Source:ICIS News

SINGAPORE (ICIS)--High density polyethylene (HDPE) demand in India remains weak, plagued by excess availability of product in the local markets, market sources said on Friday.

Offers for October shipments from key GCC-based suppliers are yet to emerge, and are likely to be announced in the following week, market sources said.

Sporadic HDPE film offers for October shipments from the GCC emerged at $1,150/tonne CFR (cost & freight) India during the week, market sources said.

However, these received weak response from market players owing to weak buying interest, sources said.

According to market sources, ample domestic availability capped with sluggish demand in view of near-term price uncertainty have all capped buying mostly to a need-to basis in the recent months.

Furthermore, a price protection announced by domestic producers has further curbed the need to stock up, as buyers remained sidelined by a possible reduction in domestic prices in the weeks ahead, market sources said. Lower domestic posted prices in October would also cap workable levels for October-shipping GCC-origin product, leading to a pessimistic outlook for the weeks ahead, market sources said.

Moreover, several traders holding stocks of imported HDPE offer price discounts on the product in the local markets, netting losses in view of the oversupply, sources said.

According to market sources, prices quoted are as much as $60-70/tonne lower than the prevailing international prices and are also lower than the posted prices from regional producers.

A wide spread between HDPE and polypropylene (PP) prices was also cited as a factor hampering HDPE demand.

“A substitution of HDPE by PP has taken place, particularly in the case of several injection moulding and raffia applications, where margins are tight and processors are more sensitive to price spikes”, an Indian importer said.

“PP prices that have ranged as much as $150/tonne lower than HDPE in 2016 has led to a shift away from the more expensive HDPE”, the importer said.

According to the importer, HDPE can be substituted by PP in several applications and does not affect the end-product.

“A lot of big packaging users like FMCG companies in India are not particular on the type of polymer used, but stress on the finished product specifications that remain largely same even after the substitution,” the importer said.

On 16 September, ICIS assessed spot HDPE film import prices in the country at $1,110-1,150/tonne CFR India, unchanged from the week before.

PP injection and raffia prices were assessed by ICIS at $1,000-1,030/tonne CFR India in the week ended 16 September, also stable week on week.

Focus article by Veena Pathare

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By Veena Pathare