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Don’t shoot the messenger

China, India, Markets, Polyolefins
By John Richardson on 10-Jun-2011

By Malini Hariharan

There is a lot of free price information and advice available to Indian polymer buyers via emails and SMSs. The gist of the messages these days is that the Chinese market is weak, international and domestic prices will fall and buying should be in limited volumes.

An email that landed in the blog’s inbox today advises buyers to wait till 15th June to review international prices and then take a decision on buying additional volumes.

There is nothing wrong with the advice – in a falling market it make sense for buyers to hold back purchases. But are these messages also shaping sentiment and speeding up price corrections?

A source from a local polymer producer points out that the price information in the messages are usually incorrect. “But sentiment is affected; people think why should they buy when the expectation is for a further fall in prices.”

“They are a mood spoiler; the market is being driven because of rumours,” complains a source from a second producer.

The complaints are justified but the blog is confident that they will disappear once markets recover as the advice then would be for buyers to buy before the next price hike.

But the million-dollar question is when will markets recover.

“At APIC producers were saying that this has gone on for too long; the price fall has to stop. But we do not know whether this will happen in 15 days or two months,” says the first source who is now pinning his hopes on the start of the Chinese manufacturing season and agricultural film season in July-August.

But a meaningful recovery might be difficult given the slowdown in manufacturing activity. And as highlighted by the blog earlier this week many others in the industry have already written off 2011.