Indian polymer demand subdued ahead of April offers

SINGAPORE (ICIS)–Polyolefins demand in India was slow, with buying interest tempered by a myriad of factors ahead of April price announcements, including financial year-end of the country and scheduled turnarounds of some plants.

Polypropylene (PP) demand stayed largely subdued, even though the Indian market saw only sporadic March offers from the Middle East due to tight supply.

“Despite limited import offers coming India’s way in the last one to two months, buyers don’t seem to be eagerly waiting for April offers,” an Indian PP importer said.

For one, several processors opted to focus on completing contractual commitments for domestic cargoes ahead of the fiscal year end on 31 March, tempering spot interest for imports.

Others looked to maintain lean stocks at the year-end, and hence cut back on buying from the local traders.

Cash flow issues continued to persist, especially among companies who reduced purchases to free up money for annual tax payments.

PP demand was thus mostly restricted to grades that were in limited supply from regional producers.

“Suppliers are rationing volumes for PP film and injection moulding so there is some buying induced due to that, but nothing much otherwise,” the PP importer said.

Moreover, processors also began to build stocks ahead of a regional producer’s scheduled maintenance shutdown in April, moderating the likelihood of any sudden surge in demand or prices.

Demand for most polyethylene (PE) imports also suffered a similar fate, with the year-end lull weighing on domestic spot purchases.

Demand for fresh low density PE (LDPE) imports hangs in balance, as buyers waited for March-lifting cargoes to arrive.

March LDPE shipments were previously  booked at prices significantly higher than February lots, following an unexpected outage at a major domestic facility.

This prompted importers to assume a cautious stance to April offers, and wait for clarity on the resumption of operations at the local producer unit.

“Any further delay in the domestic unit’s startup would renew demand for April-lifting imports, but we would wait until April for this,” a PE importer said.

Demand for high density PE (HDPE) blow moulding imports stayed largely subdued, owing to restricted cash availability and sufficient domestic availability to cater to the prevailing demand levels.

Processors looked to wait for the cash availability to improve once the elections are over and there is clarity on the government in power, and its policies.

Linear low density PE (LLDPE) film was not available in surplus quantities from local suppliers anymore, as blend formulations began to see greater percentage of the grade in view of the domestic LDPE shortage since end-February.

Even then, it remained available in sufficient quantities to cater to the prevailing demand levels, limiting interest for imports.

On the supply front, PE exporters in the Middle East remain less inclined to offer large volumes of HDPE and LLDPE lots to India, owing to significantly higher netbacks in other markets.

LDPE netbacks are likely to remain stable or improve further, if the Indian market remains short on domestic supply.

Netbacks to FOB Middle East – LDPE film

Although netbacks realised for PP in India are likely to see some improvement in April, higher prices realised in other Asian markets may curb volumes offered.

Netbacks to FOB Middle East – PP raffia

On 16 March, ICIS assessed LDPE film prices in India at $1,040-1,075/tonne CFR India, stable from the week before.

PP raffia/injection prices in India were assessed at $1,090-1,110/tonne CFR India, also unchanged week on week, ICIS data showed.

Focus article by Veena Pathare